According to the Bank of America, a rising U.S. dollar could actually benefit a group of European stocks. As the U.S. dollar index reaches its highest level since March, the bank’s screen captures European companies that are expected to outperform as the U.S. dollar rises. These European stocks have reported revenue exposure to the U.S. or North American region that exceeds 20% and also show a significant positive slope against the U.S. dollar index. Prominent names on the bank’s list include British American Tobacco, Diageo, BP, Novozymes, Qiagen, Bayer, Roche, Wolters Kluwer, Tenaris, and Nokia.
In the last quarter of the year, the U.S. dollar index is predicted to hit a “golden cross,” where its 50-day moving average surpasses its 200-day counterpart. This milestone typically signifies further gains in the coming months. While this scenario usually puts pressure on global economies and stock markets, certain European stocks are expected to benefit. Over the past five years, low-risk stocks, and companies in the energy sector and Norway have outperformed the most when the U.S. dollar index has been rising. European healthcare companies, as well as those in media, energy, and telecommunication sectors, are also featured on the Bank of America’s list.
Among the European stocks identified, British American Tobacco, Diageo, and BP are some of the top names. These companies have reported revenue exposure to the U.S. or North American region greater than 20%. Other European healthcare companies such as Novozymes, Qiagen, Bayer, and Roche also make the list. Additionally, Wolters Kluwer, Tenaris, and Nokia, operating in media, energy, and telecommunication sectors respectively, are expected to benefit from the rising U.S. dollar. With the U.S. dollar index reaching its highest level in months, these European stocks are likely to experience further gains in the coming months.