Eurostoxx futures have dropped 0.2% in early European trading. Traders are staying cautious as they wait for the market to open. German DAX futures are down 0.2%, while French CAC 40 futures have fallen by 0.1%. On the other hand, UK FTSE futures are up by 0.1%. In the US, futures have slipped 0.1% as Wall Street gets ready to start the trading day. The DAX saw small gains yesterday, but it is expected to decline as trading resumes. The upcoming US ISM manufacturing PMI data could give more insight into the overall market. Traders should pay close attention to this information. This morning, there is a slight risk-off sentiment, with most European futures in the red before the cash open. The small dip in US futures indicates that this cautious mood is widespread. This follows a period of low trading volume over the summer, and now we are looking for a clear market direction. Much of this caution is linked to the upcoming US ISM manufacturing data, which could reveal hints about economic strength. Last month, the index showed a slight contraction at 49.5 in August 2025. If we see another weak number, it could heighten fears of an economic slowdown. This data is vital for understanding the Federal Reserve’s next moves on interest rates. In Europe, we are still processing recent comments from the European Central Bank, which indicated that the battle against inflation is not over yet. The latest Eurozone inflation figure for August unexpectedly rose to 2.7%, leaving the market uneasy. Therefore, any signs of economic weakness could lead to challenging stagflationary conditions for policymakers. Due to this uncertainty, implied volatility is creeping up, with the VSTOXX index for Eurostoxx 50 options rising to 16 from its summer lows of around 13. This indicates that traders are starting to buy protection or expect larger price fluctuations in the coming weeks. It might be wise to consider strategies that take advantage of potential market swings, rather than betting on a single direction. This scenario could be ideal for option spread strategies, like vertical spreads, which help define risk on directional bets. We should also keep in mind that historically, markets tend to perform poorly in September, a trend observed over many decades. Looking back at times of central bank uncertainty, this month often brings trend reversals.

here to set up a live account on VT Markets now