President Trump’s fluctuating dollar is causing concern for equity investors. While a weaker dollar benefits exporters and multinationals, it also leads to less attractive American assets, higher input costs, and a potential inflationary impact on end products. Investors are shifting towards export-oriented US stocks and international equities due to the dollar’s decline.

The S&P 500 is lagging behind international indexes due to the weakening dollar. A rotation from US stocks to overseas markets is evident, with Europe, Japan, and Brazil outperforming in local currencies. Investors are seeking opportunities outside the US for lower valuations and currency tailwinds, as seen in last year’s market performance.

A weaker dollar is prompting a shift towards companies with overseas sales in Europe, benefiting from the currency drop. European stocks with a higher percentage of overseas sales are preferred by investors. Dollar weakness can impact European earnings per share by about 2%, with certain sectors more exposed. However, the correlation between the dollar and US stock prices is historically low.

Despite Washington’s preference for a strong dollar, the currency has weakened significantly since Trump’s inauguration. The administration’s policies and actions have soured currency traders on the greenback, leading to a decline in the Bloomberg Dollar Spot Index. Equity investors are adapting to the changing currency dynamics and market conditions, anticipating further dollar weakness.

Read more at Yahoo Finance: Trump’s Dollar ‘Yo-Yo’ Has Stock Investors Looking Overseas