European stocks opened higher today, with various indices making gains. The Eurostoxx increased by 0.6%, Germany’s DAX rose by 0.7%, France’s CAC 40 gained 0.5%, and both Spain’s IBEX and Italy’s FTSE MIB advanced by 0.5%. The UK’s FTSE saw a smaller rise of 0.1%. Concerns about the US-EU trade deal continue. While a trade war has been avoided, there is some dissatisfaction in Europe regarding von der Leyen’s agreement. Meanwhile, Japan’s Nikkei index fell by 0.8%, marking its third consecutive day of losses this week. The market is also looking ahead to major tech earnings from Wall Street, expected after the close on Wednesday and Thursday.

Market Mood

Today’s market mood, on July 29, 2025, shows a slight bounce in European stocks, signaling a fragile recovery. Although the DAX and CAC 40 are up, they are rebounding after several days of selling pressure linked to renewed trade issues with the US over digital services taxes. This temporary calm may be an opportunity to prepare for upcoming volatility. We are closely monitoring low volatility levels, with the VIX index around 14. Historically, such low levels before major earnings announcements from giants like Microsoft and Alphabet often lead to sharp market moves. The current low cost of options presents a chance to prepare for a potential spike in volatility. This situation suggests we should look into buying protection against a possible downturn. Purchasing out-of-the-money put options on major indices like the Euro Stoxx 50 or the Nasdaq 100 is a cost-effective strategy. These positions could gain if negative earnings surprises or bad trade news push the market lower in the coming weeks.

Effective Strategies

For those who expect a big price swing but aren’t sure of the direction, a long straddle on key tech stocks could be a smart move. This strategy involves buying both a call and a put option, allowing you to profit from a significant move either up or down. We would focus on options that expire in late August to capture the immediate market reaction and any resulting trends. We also need to consider the broader economic data. Eurostat’s latest flash estimate shows Eurozone inflation steady at 2.8%. This ongoing inflation makes it less likely that the European Central Bank will intervene with supportive measures if markets begin to slide. This reinforces the case for having downside protection ready. Create your live VT Markets account and start trading now.

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