Last night the US federal reserve opted to increase their reference interest rate by 0.25% as the US economy improves following years of stimulus and the optimism that a Trump presidency is appearing to bring.
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For Australian companies, this means we will most likely see a stronger US dollar as investors shift funds invested in government bonds and shares to the US. This could also see the Australian dollar weaken over time.
Australian companies that generate a significant portion of earnings from overseas, or report in US dollars, stand to benefit because those earnings now translate to a greater amount of Australian dollars. In addition, goods produced in Australia are now cheaper for the US to import.
10 Top Blue-Chip Stocks for a Lower Australian Dollar
Here are 10 companies set to benefit from the lower Australian dollar and some details about their operations:
Rigid packaging group Amcor Limited (ASX: AMC) derives 95% of earnings offshore and 30% from the US.
Global blood plasma products companies CSL Limited (ASX: CSL) and Cochlear Limited (ASX: COH) are two of the brightest medical stocks on the ASX. They both generate a portion of sales in the US, however negative exchange rate movements in Switzerland may lessen the impact.
Computershare Limited (ASX: CPU) operates sharemarket registries in Asia, Australia, and New Zealand, Canada, Europe, Africa and the United States.
Iress Ltd (ASX: IRE) offers financial tools to professionals in Australia, New Zealand, Canada, the UK and South Africa.
Brambles Limited (ASX: BXB) provides container and pallet pooling solutions to companies all over the world.
Fortescue Metals Group Limited (ASX: FMG), BHP Billion Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Santos Ltd (ASX: STO) will all see higher Australian-dollar denominated prices for their commodities, boosting their competitiveness globally, although US-dollar debt will lessen the benefit.
And Westfield Corp Ltd (ASX: WFD) has a portfolio of properties in the US and a development pipeline that will generate profits in US dollars. The group's earnings should receive a boost, however the majority of the group's costs are also in US dollars.
