European equity markets had mixed results. The German DAX dropped by 0.60%, while Italy’s FTSE MIB decreased by 0.36%. Spain’s Ibex and France’s CAC were nearly unchanged, both declining by 0.08%. In contrast, the UK’s FTSE 100 saw a rise of 1.08%. In the U.S., stocks faced downward pressure, especially the NASDAQ. It fell below its 200-hour moving average of 21,129.29 and ended the day 285 points lower at 21,026.03, which is a 1.34% decline. Attempts to bounce back were unsuccessful, highlighting ongoing difficulties in reversing negative trends.

S&P 500 Struggles

The S&P 500 also faced challenges, slipping below its 100-hour moving average of 6,381.84. A brief recovery reached 6,383.32 but quickly reversed, ending at 6,365. Currently, both the NASDAQ and S&P 500 indices are vulnerable to further declines due to unsuccessful recovery attempts and the inability to hold essential average levels. With both the NASDAQ and S&P 500 falling below key short-term moving averages, this signals bearish trends in the U.S. This weakness comes after last week’s CPI data, which was slightly higher than expected at 3.5%. This raises worries that the Federal Reserve will keep its strict policies in place. Derivative traders might consider buying puts on the QQQ or SPY ETFs to protect against or benefit from potential downturns in the coming weeks. The difference in Europe’s performance, with the UK’s FTSE 100 doing well, shows that sector-specific factors are at play rather than a broad regional trend. The FTSE’s strength is mainly due to its focus on energy stocks, fueled by Brent crude oil prices rising above $95 a barrel due to concerns about supply. Meanwhile, the German DAX is feeling the impact of recent manufacturing PMI data from China, which signals a slowdown and negatively affects German export sentiment.

Market Volatility

The current market environment indicates growing concern, as the VIX has increased over 20% this past week to about 18, a level we haven’t consistently seen since spring. This pattern of weakness in U.S. technology stocks alongside strength due to commodities in other regions reminds us of parts of the 2022 rate hike cycle. We should keep a close eye on upcoming central bank statements, as options pricing indicates higher volatility around the September meetings. Create your live VT Markets account and start trading now.

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