The advent calendar spreads anticipation every day and makes you smile until Christmas. In the no-spread campaign, discount certificates on the DAX (Performance Index) of the index asset class can be traded without a spread during the main trading hours of the underlying asset from December 17th to December 23rd.*
The development of consumer prices in the US inspires confidence
There were several important dates on the agenda this week. The main positive is that inflation in the US is showing downward trends, which means that the Fed’s central bank policy is having the desired effect. Starting with the peak of US consumer price developments in June 2022, where a year-on-year increase of 9.1% was recorded, the inflation rate has since then tended to decline. Most recently, on December 12, the US consumer price index for November was reported at 3.1% on an annual basis, which was also below the consensus estimate of 3.2%. The Fed aims for price stability in the medium term with an inflation rate of around 2%. The Fed has now again revised its estimates for the coming year. It now expects a lower rate of inflation for 2024 than originally predicted. The inflation rate is expected to average 2.4%, following the 2.5% expected in September. The Fed now expects an average inflation rate of 2.8% for 2023, after forecasting 3.3% in September.
The Fed promises deeper interest rate cuts for 2024
On the evening of December 13, the Fed left the key interest rate unchanged in the range of 5.25 to 5.50% for the third time in a row. It is the highest value in more than two decades. In this context, it is exciting that interest rate cuts are increasingly likely over the next three months. Interest rate cuts over the course of 2024 could potentially be even larger than previously thought. The press release said Fed policymakers now expect an average key interest rate of 4.6% next year, instead of the 5.1% communicated in September. That suggests three rate cuts in 2024. According to FedWatch, a majority of 68.5% currently believe the first rate cut could be announced on March 20 by 25 basis points to a range of 5.00% to 5.25%. As US Federal Reserve Chairman Jerome Powell made clear at the press conference after the decision on interest rates, members of the monetary policy committee also discussed the possibility of lowering interest rates. These statements, in turn, have sparked renewed buying interest among investors, as falling interest rates reduce companies’ refinancing costs, which in turn could have a positive effect on companies’ earnings developments.
The ECB dampens the mood a bit
Other central banks such as the Swiss National Bank (SNB), the European Central Bank (ECB) and the Bank of England (BoE) also did not announce any adjustments to their interest rate decisions this month. However, investors were a little disappointed by ECB President Lagarde’s statement. While it left the key interest rate unchanged at 4.5% on December 14, as planned, it also said there was no talk of a rate cut that day.
About 21% this year!
The leading German DAX index managed to achieve a price increase of roughly 21% in the current year. It is noteworthy that the index was in an overarching corrective movement in the summer months between August and the end of October. Since then, an accelerating uptrend has developed, rising to new highs several times in recent days. Starting from a local low of 14,625 points on October 23, the index was able to achieve a price increase of more than 16% in about one and a half months to a local high of 17,003 points on December 14, making a large part of the total annual performance. The trend is mainly confirmed by buy signals from GD 20, GD 50 and GD 200. If the DAX stabilizes at a high level in the coming months after dynamic price growth, discount certificates could be interesting for such a scenario.
Product Idea: Classic Discount Certificate for DAX (Performance)
Discount certificates are an attractive alternative to investing directly in an index. Investors have access to a selection of matching products based on the underlying DAX (performance). An example is a discount certificate with WKN: DJ7H98, which is due on October 4, 2024 (the maturity date). The investor does not receive any additional income (e.g. dividends) and has no other claims from the underlying asset.
There are two options for redeeming the certificate:
- If the final settlement price for options contracts on the underlying DAX on September 27, 2024 (reference price) is at or above the limit, the investor will receive a maximum amount of EUR 164.50.
- If the reference price is below the ceiling, the investor will receive a repayment amount in euros that corresponds to the reference price multiplied by the subscription ratio. Investors will suffer a loss if the redemption amount is less than the purchase price of the certificate.
AND A complete loss of invested capital is possible (Risk of total loss). AND Total loss occurs if the reference price is zero Yippee. AND Total loss capital employed possible even if DZ BANK as the issuer can no longer fulfill its obligations from the certificate due to official orders or insolvency (insolvency/over-indebtedness).
The discount certificate described here is aimed at investors who have an investment horizon of October 4, 2024 and expect the underlying DAX (performance) to be at or above 16,450.00 points on September 27, 2024.
A detailed explanation of the technical terms listed in our glossary.
Status: 17 December 2023, DZ BANK AG / online editorial
* Conditions of participation
The no-spread promotion runs from December 1st to December 24th, 2023. No new material will be published on December 23rd and December 24th, but marketing refunds will be provided. Underlying assets mentioned during the promotional period can be traded without spread for 7 promotional days. Date of publication plus an additional 6 calendar days applies. The no-spread promotion is valid during the main trading hours of the advertised underlyings and is limited to the quoted number of shares. DZ BANK reserves the right to terminate the campaign prematurely and without giving reasons. This applies both to the total and to the individual base values or to the reduction of 7 days of action.
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