Exchange Rate Assumptions and Profit Impact: First Look at "Overall Revision"
According to calculations by Bank of America, if the euro remains around 1.19 against the dollar, the STOXX Europe 600 index's earnings per share could decrease by approximately 4.5% in 2026. The rationale is that a weaker dollar will alter overseas income conversion and cost structures, thereby putting pressure on corporate profits.
Industry Divergence: Who is More Likely to Benefit?
At the sector level, Bank of America's quantitative strategy suggests that the impact of a weaker dollar on European industries is uneven: the energy and utility sectors are more likely to benefit, while construction and materials, as well as automotive and parts, are more susceptible to negative effects.
Stock Selection: Insights from Historical Sensitivity Winners and Losers
Bank of America further uses screening methods to list companies that may perform better in a "strong euro" scenario (such as certain industrial and tourism-related companies). It also warns that if the EUR/USD remains high, some healthcare and global consumer/industrial companies' profits may face more pressure.
Winners: Tourism and Industrial Chains More Favored
Screening by the institution identifies some companies with more "positive" sensitivity to the euro as potential winners, including Siemens Energy, Fresenius, Infineon, Adecco, and Anheuser-Busch InBev; the tourism and industrial sectors also frequently appear, with TUI Group notably highlighted for its expected improvement.
Losers: Healthcare and Consumer/Industrial Giants More Likely to Be Under Pressure
Under the assumption of a "strong euro maintained," the screening results also provide a group of companies more likely to face profit pressure: heavyweight healthcare stocks (such as Argenx, Novo Nordisk, AstraZeneca, Roche) and several global consumer and industrial groups (such as Bunzl, Compass Group, Diageo, Wolters Kluwer, etc.).
