Deputy City Editor
Sharp swings on the currency markets yesterday could have a marked influence on company profits, analysts said yesterday. Their models suggest that companies with substantial exports to the Continent will suffer most from the dollar's rise against sterling and the relative weakness of the mark. Businesses with a large US presence, or dealing in dollar-denominated commodities, will benefit, however.
British Steel was highlighted yesterday as an extreme case of a firm likely to be squeezed by rising input costs denominated in dollars and less valuable selling prices based on a mark benchmark. Its shares closed 4.5p lower at 175.5p.
Other sectors likely to be watching the pound's rise against the mark with alarm include engineers, especially the motor manufacturers, and building materials, where companies such as RMC and Redland are highly dependent on German earnings.
Sectors tipped to benefit include pharmaceuticals companies, which make an average of 48 per cent of their sales in the US. The pharmaceuticals and household-goods sectors were two of the strongest performers in the market yesterday. Oil companies should also benefit, with a quarter of their sales in America and the oil price denominated in dollars.