Hurricane Idalia Puts These ETF Areas in Focus
Hurricane Idalia — a dangerous category 3 storm — could prove to be one of the most hazardous storms to hit Florida. It flooded various regions within a U.S. state, serving as a prelude to what meteorological agencies anticipate as an extended period of unusually intense storms surpassing earlier predictions. This pattern is projected to persist until November of the current year.
As Hurricane Idalia makes landfall along the Florida coast, it is anticipated to unleash surges of seawater and cause power outages. Needless to say, a catastrophe of this level is most likely to mess up citizens’ lives. With them, several effects on corporate life are likely to be noted.
That said, let’s discuss the key areas that call for attention right now for profits or losses.
Losers
Insurance
Severe destruction is likely in Florida. UBS expects Hurricane Idalia to result in insured losses of $9.36 billion based on preliminary estimates, as quoted on Yahoo. Insurance stocks normally fall more than 1% in the month following the disaster caused by a Category 3 storm, per Kensho, as quoted on CNBC. So, the impact of Hurricane Idalia on insurance stocks is anybody’s guess.
Shares of property and casualty homeowners’ insurance companies like Universal Insurance Holdings Inc. UVE and HCI Group Inc. (HCI) may come under pressure. Naturally, insurance ETFs iShares Dow Jones US Insurance Fund IAK and SPDR S&P Insurance ETF (KIE) will likely feel the pressure.
Transportation
A severe impact from Idalia could roil rail and container activity and crush infrastructure for transportation. Airlines are already suffering from rising energy prices. Now, hurricane Idalia would hurt the segment further.
Tampa International Airport has been shut as Hurricane Idalia grows to the level of a severe storm. More than 500 flights have been cancelled. Naturally, transportation ETFs like SPDR S&P Transportation ETF XTN and U.S. Global Jets ETF JETS may have to bear the brunt ahead.
Gainers
Home Retailers & Infrastructure & Materials
Rebuilding of homes and structures is necessary for the aftermath of a hurricane. Home Depot Inc. (HD) and Lowe's Companies Inc. LOW are thus in a bright spot. ETFs like Consumer Discretionary Select Sector SPDR Fund XLY and Invesco Dynamic Building & Construction PKB should also benefit.
Companies dealing in building materials are likely to see a surge. The Materials Select Sector SPDR Fund XLB has a high chance of outperforming.
A Boon for Auto Sales Too?
Repurchase of cars will gain traction now on higher replacing demand for the damaged vehicles. First Trust NASDAQ Global Auto Index Fund CARZ can thus gain ahead. The largest retailer of used vehicles in the United States – CarMax KMX – should also get investors’ attention.
Energy
The storm’s threat to oil production in the Gulf of Mexico caused crude prices to go higher. If more oil and gas producers have to evacuate and suspend operations, this would add a short-term upward pressure on prices as the Gulf makes up about 15% of U.S. oil production and 5% of oil production, per oil price.com. United States Oil Fund, LP USO may thus gain ahead.
Agriculture ETFs to Rule Ahead?
Idalia may ruin Florida’s farmlands, ravaging farms of fresh tomatoes, oranges, green beans, squash and sugar cane. Idalia is likely to shift to Georgia, South Carolina and North Carolina — states famous for cotton, grain and livestock.
Needless to say, against this backdrop, Invesco DB Agriculture ETF DBA, iPath Series B Bloomberg Cotton Subindex Total Return ETN (BAL) and Teucrium Sugar Fund CANE may be up for gains.
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Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report
CarMax, Inc. (KMX) : Free Stock Analysis Report
Materials Select Sector SPDR ETF (XLB): ETF Research Reports
United States Oil ETF (USO): ETF Research Reports
UNIVERSAL INSURANCE HOLDINGS INC (UVE) : Free Stock Analysis Report
Invesco Building & Constructio (PKB): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
First Trust S-Network Future Vehicles & Technology ETF (CARZ): ETF Research Reports
U.S. Global Jets ETF (JETS): ETF Research Reports
SPDR S&P Transportation ETF (XTN): ETF Research Reports
iShares U.S. Insurance ETF (IAK): ETF Research Reports
Teucrium Sugar ETF (CANE): ETF Research Reports
Invesco DB Agriculture ETF (DBA): ETF Research Reports
