Scared of the profit impact of a strong U.S. dollar? Relax a bit.
With the U.S. dollar hovering around a 2018 high, the mood on Wall Street is that dollar strength will mean less bumper sales and profits for multinational companies later this year. S&P 500 I:GSPC companies derive about 30% of their revenues from overseas -- when the dollar is weak sales and profits tend to get a boost due to conversion considerations. The contrary happens when the dollar trade reverses.
But according to new research from S&P Dow Jones Indices, stocks across a variety of assets classes have performed well since 2008 when the dollar has risen.
Here are some takeaways from S&P's research.
Since 2008, for Every Rise in the Dollar
- Large-caps gain 71 basis points.
- Mid-caps gain 82 basis points.
- Small-caps gain 95 basis points.
Sector Performance When the Dollar Gains
- Materials, Financials and Energy are all driven more by a falling dollar than a rising one.
- A rising dollar helps Consumer Staples, Health Care and Utilities.
- Small-cap Financials have outperformed their larger counterparts.
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