Notice of Index Modifications: Ferrari ETPs

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Author

Violeta Todorova

Date

DAX 40 Can Rise to 20,000 by Year End

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  • German inflation eases more than expected in June
  • The Manufacturing sector remains in contraction territory
  • German unemployment rises unexpectedly
  • DAX 40 likely to trade higher despite economic challenges

A Surprise Decline in Inflation

German inflation fell more than expected in June, continuing its downward trend. Preliminary data from the federal statistics office showed on Monday that annual CPI eased to 2.2% in June. Analysts had forecast a slightly higher inflation rate of 2.3%, following a year-on-year increase in consumer prices of 2.4% in May.

On a monthly basis CPI rose 0.1% vs. expectations of 0.2% and on par with the prior month reading.

Impact on Economic Recovery

The slight decrease in inflation had fuelled optimism among Germans for an economic rebound by the end of the year. However, the latest uptick in inflation to 2.4% in May is a reminder that the road to lower inflation could be bumpy.

Inflation Forecast for Germany

Inflation in Germany has been on a downward trajectory since October 2022, driven by declining wholesale energy prices and the implementation of measures to counteract the impact of elevated energy costs.

However, the anticipated phasing out of these mitigating measures, coupled with higher fuel expenses, is expected to contribute to an uptick in overall inflation for the years 2024 and 2025. Additionally, sustained wage growth is likely to continue to exert price pressures in the services sector.

Overall, according to the European Commission the inflation rate is forecasted to moderate to 2.4% in 2024 and further to 2.0% in 2025, following a notable decrease from 6.0% in 2023.

German Manufacturing Sector Contracts Further in June

Germany’s manufacturing sector, which constitutes approximately one-fifth of Europe’s largest economy, declined in June, with the rates of contraction in both output and new orders reaccelerating. The accelerated fall in new orders suggests that a recovery in the manufacturing sector would be delayed.

The HCOB final Purchasing Managers’ Index (PMI) for German manufacturing dropped to 43.5 in June, down from 45.4 in May. This confirms the preliminary flash estimate and remains below the critical 50 level that delineates growth from contraction. Over the past year PMI readings have been below 50 suggesting ongoing challenges in the sector.

Impact of Increased Competition from China

One likely explanation for the weak export orders is the increasing competition from China. As domestic demand in China remains sluggish, the country is ramping up its exports worldwide, adding competitive pressure on German manufacturers.

Labor Market Struggles

The latest data from the Federal Labour Office in Germany reveals a higher-than-anticipated increase in the number of unemployed individuals in June, underscoring the impact of economic challenges on the labour market.

In June, the number of jobless individuals surged by 19,000 in seasonally adjusted terms, surpassing the expectations of a rise of 15,000. This uptick highlights the persistent weakness in the labour market.

The seasonally adjusted unemployment rate climbed to 6.0% in June, up from 5.9% in the previous month.

Stagnation Followed by a Sluggish Recovery in the German Economy

In 2023, the German economy faced a recession, marked by a 0.2% decline in real GDP, according to the German Federal Statistical Office. Despite ongoing headwinds, the economy showed slight recovery at the start of 2024, raising an optimism for the rest of the year.

Throughout 2023, purchasing power saw a significant recovery. However, private consumption remained sluggish, failing to translate increased purchasing power into robust consumer spending. This sluggish consumption has been a drag on overall economic growth.

Investment continues to be a concern, with expectations that it will contribute negatively to economic growth in 2024. This trend underscores the hesitancy among businesses to commit to new capital expenditures amidst economic uncertainties.

Impact of Weak Foreign Demand on Exports

German exports are being adversely affected by weak foreign demand for capital and intermediate goods. This decline in export activity is a critical factor in the country’s overall economic performance.

Real GDP Growth Forecast for 2024

Overall, real GDP growth for Germany in 2024 is forecasted to be a modest 0.1%. This projection highlights the ongoing challenges facing the economy and the need for strategic initiatives to foster stronger growth.

A graph of stock market

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Source: TradingView

DAX 40 Outlook

Despite its economic challenges the German benchmark index DAX 40 has experienced a strong rally and has gained 55% from its September 2022 low. Year to date the index has gained 10%.

The Relative Strength Index (RSI) has formed a bearish divergence over the past three months suggesting that momentum conditions are deteriorating, and the rally might run out of steam.

While over the long-term the market is likely to continue to trade higher toward the 19,500 – 20,000 zone, in the short-term gains are likely to be modest and a consolidation in the summer months could be seen.

Active traders looking for magnified exposure to the German stock market index may consider Leverage Shares +3x Long Germany 40 or -3x Short Germany 40 ETPs.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.

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This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.

By clicking you agree to the Terms and Conditions displayed.

Terms and Conditions

Notice

If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.

If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.

Risk Warnings

The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

United States Visitors

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area

Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.

By clicking you agree to the Terms and Conditions displayed.