Dollar drop increases stock market pain for foreign investors

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European investors in US shares struck a double strike when the slide in the dollar compounds losses at the stock and the “virtuous cycle” of the value of the stock and the profit of the currency during the recent recording of Wall Strate.

Falling shares in the US this year embarrassed wide rate This Wall -Rate will continue to exceed. But the accompanying slide in dollars increased pain for foreign investors, having completed the sample when currency growth usually offered some reductions.

This year, Blue-CHIP S&P 500 decreased by almost 4 percent, but more than 8 percent in the euro.

This has changed the signaling cycle, resulting in European investors in stocks in the US helped to strengthen the dollar, improving the profitability from non -working stock rates and calling them to allocate more, analysts said.

The dollar has strengthened over the last couple of decades against its main peers, with the last sticking of forces at the end of last year.

“This is a virtuous cycle you’ve had a long time, and now it turns another way,” said Peter Oppenheimer, the chief strategist on the Goldman Sachs.

“The US market has fallen more, and because the dollar has fallen when you translate it, the impact is even worse.”

In the last quarter of 2024, investors forced us to record maximums for technological optimism and hoping for increasing corporate taxation from Donald Trump’s loans. S&P grew by 2 percent in dollars, but almost 10 percent in the euro.

But the dollar sharply canceled this year when investors raise their assumptions about the influence of Trump’s protectionist policy. Earlier, investors expected high trade tariffs to increase inflation in the US and hurt the growth elsewhere, pushing the dollar up and the euro to the parity with green appeal.

Since mid -January, the dollar has weakened when investors are worried about the US economic growth, while the promises of Europe’s optimism promotion increase on the continent.

Some find a deeper shift in how the dollar assets are perceived. The dollar is widely seen as a shelter during stress, often strengthening when bad news falls into world shares. This encouraged foreign investors to make stocks on Wall Street without paying them to drive their currency risk because the dollar acted as a shock absorber during the sale.

“The properties that reduce the risk have played a key role in the distribution of the portfolio in the last decades,” said Deutsche Bank analyst George Saraveles, adding that it is “changing now.”

He said that in 2022, as a result of the sale of the United States, he led to similar losses for European investors, as a much deeper route Wall Street, due to changes in the role of the dollar, he said.

If this “correlation” between shares and dollar continues, European investors may think twice about downloading US stocks without currency hedges, Saravelos reports.

Some are already moving. A little fifth of the European Foundation’s European leaders, who respond to the Bank’s Bank’s poll this month, said they are underweight in the US, which is the highest share since mid -2013.

A great European outcome may pressure US shares that have fallen into the reliable territory earlier this month.

“Insufficient risks for the S&P 500 as a result of the sale of foreigners are significant,” said Apollo Torstene Slot Slot, the chief economist this week, citing overweight position, which foreign investors created in US shares.