European stocks started the day with small changes. The Eurostoxx, Germany’s DAX, and Spain’s IBEX all climbed by 0.1%. The CAC 40 in France was up by 0.2%. In contrast, the UK FTSE fell by 0.2%, while Italy’s FTSE MIB rose by 0.3%. In the US, futures took a slight break, with the S&P 500 futures dropping by 0.1%. This week has been busy for the stock market, especially with the US Consumer Price Index report set to be released on Tuesday. More data is expected later today, including the Producer Price Index and weekly jobless claims.

Market Movements

Today’s markets are mostly stable, taking a breather after strong gains earlier this week. The rally was driven by Tuesday’s US Consumer Price Index report showing inflation easing to a yearly rate of 2.8%. This raised expectations for a change in Federal Reserve policy. Today’s calm comes before the Producer Price Index and jobless claims data, creating an opportunity for traders. We are waiting to see if today’s data confirms the trend of easing inflation. Recent reports indicate that producer prices have also decreased, while initial jobless claims are slightly up to 235,000, suggesting a softer labor market. This trend supports the idea that central banks may hold off on raising interest rates further. With major indices like the S&P 500 and Eurostoxx holding steady, implied volatility remains low. The VIX index is around 13, significantly down from the levels above 25 seen during inflation surges in 2022 and 2023. This makes options relatively affordable for traders preparing for the next market move.

Trading Strategies

As the market pauses ahead of the September central bank meetings, there are opportunities in strategies that profit from sideways movement. Selling options premiums using iron condors on major indices can generate returns if stocks stay within a certain range over the next few weeks. Traders should stay alert, as this calm period could suddenly end with new economic news. This situation mirrors market behavior in 2023, where calm times were followed by sharp reactions to key data releases. Therefore, it may be smart to use this quiet moment to buy some downside protection, like inexpensive puts, or set up bullish call spreads for October. This approach allows participation in a potential breakout while clearly defining risk. Create your live VT Markets account and start trading now.

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