Global market factors that impact Baltic Dry Index

Abstract

The Baltic Dry Index is used as a strategic tool by shipping companies to monitor the daily movement of freight rates for the transportation of bulk cargoes on predetermined routes for the different types of bulk carriers. Therefore, the management of shipping companies pays great attention to the factors that can contribute to the prediction of the price movement of the Baltic Dry Index. Main goal of this paper is to explore if stock market indices of United States of America (S&P 500 stock index) and China (Shanghai stock exchange Composite index), 10 Year bond yield, CRB index, WTI Crude oil and Gold as global market factors, but also as leading macroeconomic global indicators, have impact on movement of BDI. We explored period from January 1, 2003 to December 31, 2021, with monthly data for which the multiple linear regression method was used to analyse mentioned global market factors impact on BDI. The research found that the movement of S&P 500 and SSECI stock indices and CRB index had a positive impact on the movement of BDI, while the movement of Gold and WTI crude oil had negative impact on BDI for the observed period. The scientific contribution of this paper is manifested through observation and exploring relationship of mentioned global market factors with BDI, previous papers observed shorter time period and included macroeconomic indicators which are lagging, together with some global market factors.