The U.S. currency stands near a 20-year high against a basket of its peers .DXY and is up 15.1% in the past year, lifted by a hawkish Federal Reserve and investors seeking shelter from turbulent markets.新2正网平台出租(www.hg108.vip)是皇冠(正网)接入菜宝钱包的TRC20-USDT支付系统,为皇冠代理提供专业的网上运营管理系统。系统实现注册、充值、提现、客服等全自动化功能。采用的USDT匿名支付、阅后即焚的IM客服系统,让皇冠代理的运营更轻松更安全。
NEW YORK: Companies reporting earnings in coming weeks are likely to mention one common factor gouging their results: the strong dollar.
The U.S. currency stands near a 20-year high against a basket of its peers .DXY and is up 15.1% in the past year, lifted by a hawkish Federal Reserve and investors seeking shelter from turbulent markets.
A strong dollar can be a headwind for U.S. companies as it makes exporters’ products less competitive abroad and hurts multinationals that need to convert their foreign profits back into the U.S. currency.
Each percentage point of year-on-year increase in the U.S. Dollar Index .DXY, which measures the dollar against six other currencies, translates to a 0.5 percentage point hit to S&P 500 earnings growth, analysts at MorganStanley estimated.
"You seemingly can't get a break right now. We're starting to get some relief from oil prices, but you've still got the dollar banging on you," said Bill Stone, chief investment officer at the Glenview Trust Company.
International Business Machines Corp IBM.N, Netflix Inc NFLX.O and Johnson & Johnson JNJ.N were among the companies that in the past week cited the dollar’s strength as a headwind, with Johnson & Johnson joining Microsoft Corp MSFT.O by cutting its guidance due to the impact of the greenback’s rise.
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Next week’s results from Apple Inc AAPL.O, Microsoft Corp MSFT.O, Coca-Cola Co KO.N and a slew of other companies will give investors a better picture of how businesses are holding up in the face of the strong dollar and soaring inflation.
Investors are also awaiting what the Fed will have to say on those topics at its monetary policy meeting next week, at which it is widely expected to deliver another jumbo-sized 75 basis-point rate increase. Read full story
DOLLAR DOLDRUMS
Overall, some 40% of S&P 500 revenues come from overseas, data from FactSet showed. Information technology leads all sectors with 58% of revenues derived internationally, followed by materials with 56%, while utilities companies source just 2% of their revenues out of the United States, according to FactSet.
The dollar’s strength threatens to combine with high inflation, supply chain issues and other factors to weigh on earnings, analysts said.
“The rate of change on the dollar exhibits a strong negative correlation over time vs. S&P 500 earnings revisions. USD strength comes at an inopportune time for corporates already facing margin pressure and increasingly weaker demand,” Morgan Stanley’s analysts wrote.
So far, 5.1% of the S&P 500 companies that have reported their second quarter results have posted earnings above expectations, nearly half the average of 9.5% over the prior four quarters, according to Refintiv data.
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2023-03-10 00:03:01
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