Materials Gain as Dollar Hovers Near 52-Week Low - Materials Roundup

The U.S. dollar’s persistent weakness is creating a tailwind for the materials sector, with commodities like copper, gold, and industrial metals surging as the greenback nears its lowest level in over a year. Investors are piling into materials stocks, betting that a weaker dollar will boost export revenues and commodity prices. Here’s why the materials rally is gaining momentum—and where to look next.

The Dollar’s Decline Fuels Materials Outperformance

The ICE U.S. Dollar Index (^NYICDX), which tracks the greenback against a basket of major currencies, has slumped to a 52-week low of 101.02, marking its weakest level since early 2023. This decline reflects a confluence of factors: rising concerns over U.S. economic growth, geopolitical risks, and a flight to safety in non-dollar assets. For materials companies, this is a golden opportunity.

A weaker dollar makes U.S. commodities cheaper for foreign buyers, boosting global demand. For example, copper prices have risen 8% year-to-date, as miners like Freeport-McMoRan (FCX) and BHP Group (BHP) benefit from stronger international sales. Meanwhile, gold—traditionally a haven in times of dollar weakness—has climbed to $2,050 per ounce, with Barrick Gold (GOLD) shares up 15% since early 2024.

Why the Dollar’s Slide Matters

The dollar’s decline is most striking against currencies like the euro and yen. As of April 2025, the euro hit a 52-week high of €0.8946 per USD—meaning the dollar is at its weakest against the euro since late 2022. Similarly, the yen has strengthened to ¥140.45 per USD, its highest level in three years. This shift reduces the cost of U.S. exports for foreign buyers, directly boosting the bottom lines of materials firms.

For U.S. miners and chemical companies, this dynamic is a double win:
1. Export Revenue Boost: Companies selling to Europe or Asia see higher local-currency revenue when the dollar weakens.
2. Input Costs: Many raw materials are priced in dollars, so a weaker greenback reduces costs for companies in regions like Europe.

Sector Winners and Risks

The Materials Select Sector SPDR Fund (XLB) has outperformed the S&P 500 by 12 percentage points year-to-date, with gains concentrated in mining stocks and industrial metals producers. Freeport-McMoRan (FCX), a major copper producer, has surged 22% in 2025 amid rising demand from EV manufacturers. Meanwhile, Praxair (PX), a provider of industrial gases, has seen a 15% jump as manufacturing activity picks up globally.

But risks linger. If the Federal Reserve signals a shift toward rate hikes—or if economic data surprises to the upside—the dollar could rebound sharply, hurting commodity prices. Additionally, geopolitical tensions, such as China’s trade policies or Russia’s energy exports, could disrupt supply chains.

The Bottom Line: Materials Are a Play on Dollar Weakness—and Here to Stay

The materials sector’s rally is no flash in the pan. With the dollar near its 52-week low and central banks globally adopting divergent policies, the greenback’s decline is likely to persist. Key data points reinforce this view:
- The U.S. Dollar Index (^NYICDX) closed at 103.24 on April 18, 2025, down 1.8% from its 2024 peak.
- The Colombian peso (COP), a key emerging-market currency, has appreciated 5.6% against the dollar over the past month, highlighting broader trends.
- Materials stocks now account for 18% of the S&P 500’s year-to-date returns, outpacing tech and healthcare.

For investors, the path forward is clear: allocate to materials stocks with global exposure to benefit from the dollar’s decline. Miners, chemical companies, and industrial metals producers are the prime beneficiaries. Just as the dollar’s fall hasn’t bottomed yet, neither has the materials rally.

Data as of April 2025. Past performance does not guarantee future results.