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In October, German inflation decelerated notably, surpassing market expectations. The inflation rate came at 3%, marking the lowest level since June 2021, while economists were expecting a more moderate decline to 3.3%. This outcome reinforces the European Central Bank’s (ECB) assertion that its series of record interest rate hikes is beginning to yield the desired effects.
ECB President Christine Lagarde pointed to the anticipation of further inflation moderation as a key factor in the central bank’s decision to pause its interest rate hikes last week, following ten consecutive increases. These rate hikes have been exerting a significant impact on financial conditions, leading to reduced demand, and aligning with the ECB’s inflation target rate of 2%.
The German economy faced a contraction in the third quarter, raising concerns about the potential onset of a recession in Europe’s largest economy. The Gross Domestic Product (GDP) shrank by 0.1% compared to the previous quarter, which was slightly less severe than the 0.2% decline projected by economists. The decline was attributed to a decrease in household spending.
The data shows the challenges Germany faces in recovering from a downturn induced by energy-related factors during the past winter, followed by two quarters of stagnation or minimal growth, as per revised data.
A recent survey of purchasing managers revealed that the manufacturing sector in Germany continues to grapple with declining new orders, exerting pressure on the broader Eurozone economy. The impact of higher interest rates is notably dampening demand for industrial goods, which Germany relies on more heavily than its European counterparts for economic growth. While the services sector had shown more resilience, business surveys by S&P Global indicate a slowdown in momentum. Also, there are signs of strain emerging in the labour market, which had previously been a bright spot.
Source: TradingView, DAX 40 Yearly Chart
European equities experienced substantial gains last week, driven by robust corporate earnings and a perceived dovish shift from central banks following several policy meetings. Markets currently expect no more hikes and futures imply an 80% likelihood that the central bank will commence easing as early as April, reflecting concerns about the region slipping into a recession.
In a somewhat unexpected development, German factory orders increased again in September, offering a glimmer of hope that the manufacturing challenges facing Germany might be abating. Monday’s data revealed a 0.2% rise in demand for the month, marking the second consecutive monthly gain and surpassing analysts’ expectations, which had projected a 1.5% decline. However, it’s worth noting that the August advance was revised downward by roughly 50%, down to 1.9%.
The statistics agency attributed September’s improvement to a 4.2% surge in foreign orders, which offset a 5.9% decline in domestic orders. Over the entirety of the third quarter, there was a 3.9% decline in factory orders.
The DAX 40 index enjoyed a robust rally last week; however, the rate-repricing rally has taken a breather on Monday. Unless the resistance level of 15,575 is breached to the upside, the current rebound may be viewed as just another bear market rally.
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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.
