According to the Bank of America, a number of European stocks could benefit from the rising U.S. dollar. The U.S. dollar index recently reached its highest level since March, and the Bank of America predicts further gains in the coming months. European companies that have reported a revenue exposure of over 20% to the U.S. or North American region and show a positive correlation to the U.S. dollar index are expected to outperform. Some of the European stocks that made it onto the Bank of America’s list include British American Tobacco, Diageo, BP, Novozymes, Qiagen, Bayer, Roche, Wolters Kluwer, Tenaris, and Nokia.
The Bank of America’s analysis suggests that as the U.S. dollar strengthens, certain European stocks are likely to thrive. This is due to their strong revenue exposure to the U.S. or North American region and their positive correlation with the U.S. dollar index. The “golden cross” milestone, where the 50-day moving average of the U.S. dollar index surpasses its 200-day counterpart, is seen as a signal for further gains in the currency. European companies with significant exposure to the U.S. market, particularly in sectors like healthcare, energy, and telecommunications, have the potential to outperform in this scenario. British American Tobacco, Diageo, BP, Novozymes, Qiagen, Bayer, Roche, Wolters Kluwer, Tenaris, and Nokia are among the European stocks identified by the Bank of America.
In the past five years, low-risk stocks, energy companies, and Norway have outperformed the most when the U.S. dollar index has risen. This trend is likely to continue as the U.S. Federal Reserve maintains its commitment to higher interest rates. The Bank of America’s analysis highlights the potential benefits for European stocks that have significant revenue exposure to the U.S. or North American region and a positive correlation with the U.S. dollar index. As the U.S. dollar continues to strengthen, companies like British American Tobacco, Diageo, BP, Novozymes, Qiagen, Bayer, Roche, Wolters Kluwer, Tenaris, and Nokia could experience increased performance in the coming months.
