Boeing Co. (NYSE:BA)’s shares declined today and dragged futures on the Dow Jones Industrial Average lower.
Ethiopian Airlines flight ET302 crashed on Sunday en route from Addis Ababa to Nairobi killing 157 people.
Given the cause of the crash is still unknown, and this is the second such incident involving Boeing’s new 737 Max 8 plane, several countries including China and Indonesia have ordered all 737 Max 8s grounded until further notice. That’s more than 100 aircraft out of commission for now.
Boeing’s shares dropped 10.6% in early pre-market trading in New York and plunged 7.6% in Germany. They were recently trading down 9.1 per cent in New York, though trading activity is typically thin so early in the US morning.
Eleanor Creagh, a Sydney-based market strategist at Saxo Capital Markets, commented:
Boeing shares slumped 9.7 percent to $381.70 in pre-market U.S. trading. The stock could slide in U.S. trading as concerns are increasing over the jet. Even a 5 percent fall would cut more than 100 points from the Dow, she estimated. When a Lion Air plane of the same model sank into the Java Sea off the coast of Indonesia last year, killing 189 passengers and crew, the shares lost almost 7 percent.
Weakness transpiring in Boeing’s share price will hit the Dow. The stock has been responsible for about a third of the gains as markets recovered since the December low, Creagh added.
The decline shows the the world’s largest aerospace group shares poised for their worst trading day since September 29th, 2001. Back then the shockwaves of the aftermath of the September 11 terrorist attacks were being felt throughout the industry.
Source: Google