The US dollar (DX = F,, Dx-y.nyb) has jumped in the past six months – and Its rapid increase has had an impact on a series of corporate income so far this season.
Companies ranging from major technology giants to consumer -oriented brands have mentioned the opposite winds in their fourth quarter results and advanced orientations, A trend that analysts have been warned previously.
“In addition to the recent strength of the US dollar, the share of S&P 500 companies mentioning FX increased through 4Q profits,” wrote Goldman Sachs analyst David Kostin, in a note to customers last week.
Historically, a solid dollar has a negative impact on companies that do most of their activities abroad, as this leads to growth in income and slower profits over time due to unfavorable exchange conversions.
At this point, Megacap Tech generates a significant amount of income abroad. Apple (Aapl)) said about 58% of overall income International sales during his last quarter. And the percentage of sales abroad with other magnificent seven players like alphabet (Goog,, Googl), Microsoft (Msft), Tesla (Tsla), and meta (Meta) arrived at around 50% or more for everything 2024.
Almost all of these companies have expressed warnings of the dollar strength in their respective versions and calls. Even Amazon (Amzn)), which generated just over 23% of revenues abroad during its last quarter, said a wind from around $ 900 million to currencies in the fourth quarter, “around 700 million Dollars more than we had planned. “
Consequently, the electronic commerce giant said that revenues in the first quarter should only increase by 5% and 9%, which could potentially be the slowest income growth in its history.
“These directives provide an unusual and unfavorable impact of around 2.1 billion dollars, or 150 base points, exchange rates,” the company said in the profits.
But these are not only technological companies feeling the impact.
McDonald’s (MCD) said it expects “foreign currencies to be an annual front wind at 2025 EPS”. Coca-Cola (Ko)) issued similar adviceProviding growth as a percentage of comparable BPA “to include a 6% to 7% of money”, while Johnson & Johnson (Jnj) predicts $ 1.7 billion for annual sales.
The greenback Positive price action was largely motivated by two main catalysts: Trump’s election and subsequent republican scanningas well as the recalibration of the softening of the Fed Future Faced with strong economic data.
After reaching a hollow of September, the US dollar index, which measures the value of the dollar compared to a basket of six foreign currencies (the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish Krona And the Swiss franc), rallied more than 7% and hovers near the two -year summits he reached in January. Since the elections, the index has climbed approximately 4%.
