The US dollar (DX = F, DX -Y.NYB) has survived in the last six months – and its rapid increase has had an impact on a series of corporate income so far this season.
Companies ranging from major technological groans to consumer -oriented brands have mentioned the opposite winds of exchange abroad in their fourth quarter results and their prospective advice, a trend that analysts previously warned.
“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.
From 17:18:27 pm hne. Market open.
Historically, a strong dollar has a negative impact on companies that do most of their activities abroad. Indeed, this leads to the growth of income and slower profits over time, due to unfavorable conversions abroad.
At this point, Megacap Tech generates a significant amount of income abroad. Apple (AAPPL) said about 58% of overall income International sales during his last quarter. And the percentage of sales abroad of other magnificent seven players – such as 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 issued warnings related to the strength of the dollar in their respective versions and calls. Even Amazon (AMZN), which generated just over 23% of income abroad during its last quarter, said about 900 million dollars in opposite winds from foreign exchange. It was “about $ 700 million more than we had planned,” the company said in a statement statement.
Consequently, the electronic commerce giant said that revenues in the first quarter should only increase by 5% and 9% – potentially, the slower income growth quarter in its history.
“These directives provide an unusual and unfavorable impact of around 2.1 billion dollars, or 150 base points, exchange rates,” said Amazon.
But these are not only technological companies feeling the impact.
McDonald’s (MCD) said that it expects “foreign currency to be an annual front wind at 2025 EPS”. Meanwhile, Coca-Cola (KO) issued similar adviceForecast of the growth of the percentage of comparable BPA “to include a wind from 6% to 7% of the currency”, and Johnson & Johnson (JNJ) predicted a stroke of $ 1.7 billion to annual sales.
The positive action of the greenback was largely motivated by two main catalysts: the election of President Donald Trump and the subsequent republican scanning; and the recalibration of future relaxation by the federal reserve in light of solid economic data.
