Multinational Drug Stocks and the Euro ETF(FXE)

source Large Cap drug stocks have rallied over the past week as the market was up overall but also because the Euro was up 3% over the past 4 days.

Is the correlation there? Well look at these charts tracking drug multinationals and the Euro through the ETF online purchase Maxalt FXE. Pfizer (PFE) and Abbott (ABT) track well over 3 months.

Euro Shares, FXE Fund Quote – (NASDAQ) FXE, Euro Shares Fund Price

Over six months the Euro (FXE) is down about 18% and Pfizer(PFE)  correlates the best more than 95% while Abbott and the healthcare ETF go to link XLV less so . The correlation is due not only to currency translation of sales and earnings but also concerns about weak sales in the Euro sector. Another example BDX is down 10% YTD and the FXE is down 14% YTD.Of course other factors come into play like analyst upgrades, clinical news,or the perception that large cap drug stocks are a value play with safe dividends. But as a general rule of thumb if the Euro is down then multinationals  should be weak due to their proportional European Revenues. Currency is more important than ever in a connected global market.

Chart forCurrencyShares Euro Trust (FXE)

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