As the war in Ukraine rages on, European companies are facing a tough macroeconomic environment with global interest rates rising, a strong dollar weakening the euro, and supply chain crunches. Meanwhile, the FTSE 100 Index is only down 2.62% year-to-date, compared to the S&P 500 which is down around 20% year-to-date.
Although a strong dollar can make imports cheaper for American consumers, multinational firms that have a large chunk of their sales in the U.S. and earn income in dollars will see gains in the dollar translate to gains on their balance sheets. With the U.S. economy facing headwinds of its own, it may not be a bad idea to diversify one's portfolio from systematic risk by investing in European stocks.
