European indices rebound after last week’s declines, while US markets also show upward movement.
by VT Markets
/
Aug 4, 2025
US indices are rising while European markets conclude their trading day.
US Market Performance
The Dow Jones Industrial Average increased by 486.55 points, or 1.12%, ending at 44,075. This follows a 1.23% drop on Friday.
The S&P Index rose by 1.32% to 6,320.14, after falling 1.60% last week.
The NASDAQ also went up by 359 points, or 1.74%, reaching 21,010.76, following a 2.34% decrease on Friday.
Today, we see a strong rebound in both European and US markets after last Friday’s sharp decline. The German DAX and US NASDAQ are leading this recovery, but they haven’t completely recovered from their biggest losses since April 2025. This indicates that traders are still uncertain.
Market Volatility Expectations
Last week’s drop was caused by Eurozone inflation data for July 2025, which showed 3.1%. Analysts had expected closer to 2.8%, raising concerns that the European Central Bank might delay interest rate cuts planned for autumn. This issue brings back memories of the aggressive rate hikes from 2022 and 2023 aimed at controlling inflation.
The VSTOXX index, measuring volatility for the Euro Stoxx 50, spiked over 22 on Friday—its highest in months—but has since settled to around 18. This fluctuation in volatility creates chances for options traders. Strategies like iron condors or strangles on indices such as the DAX could yield profits if the market stabilizes.
However, caution is needed, as this rebound might be short-lived. Markets could be pausing before the next significant data release, the US Consumer Price Index (CPI) report, due next week. A high CPI reading might lead to another market drop.
So, it makes sense to keep some protection in place for the coming weeks. We should consider buying inexpensive, out-of-the-money put options on the S&P 500 or NASDAQ 100 as a hedge against potential downturns caused by renewed inflation concerns from the US Federal Reserve.
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by VT Markets
Aug 4, 2025
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