Eurostoxx futures are down 0.2% in early European trading, indicating a break after recent gains. German DAX futures also dropped by 0.2%, while UK FTSE futures saw a slight rise of 0.1%.

US Futures Performance

The mixed trends follow a strong showing in US futures, where the Dow rose by 1.0%. However, the Nasdaq had a modest increase of just 0.1%. S&P 500 futures have decreased by about 0.2% ahead of today’s trading session. Investors are looking forward to important US economic data releases, including the Producer Price Index (PPI) and initial jobless claims scheduled for later today. This morning, the markets are taking a short pause, which is usual after the significant gains we’ve seen this week. We’re awaiting crucial US data on PPI and initial jobless claims, which could influence the Federal Reserve’s decisions on interest rates. The market is currently shaped by persistent inflation. Recent data from July 2025 shows inflation still at 3.1% year-over-year. This has caused a shift toward Dow-style value stocks and away from the rate-sensitive names in the Nasdaq. If today’s PPI numbers are strong, we may see this trend continue.

Volatility and Protection

Market volatility, indicated by the VIX index, is relatively calm at around 14. This calmness makes protective options more affordable, so it’s a wise time to think about downside protection. Using put options on major indices can be a cost-effective strategy to safeguard long portfolios against potential declines in the coming weeks. In Europe, the economic outlook seems weaker. Recent industrial data from Germany in June 2025 indicates a slowdown. This might prompt the European Central Bank to lower interest rates before the Fed, creating potential trading opportunities between the Eurostoxx and S&P 500. We need to stay alert for this growing policy difference. This market hesitation is similar to what we experienced in 2023, when markets would surge and then pause to await new inflation data before choosing a direction. Back then, periods of calm often led to increased volatility once the Federal Reserve’s strategy became clearer. History suggests we should prepare for similar movement in the market after this quiet phase. Create your live VT Markets account and start trading now.

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