The US-EU trade deal offers Europe favorable conditions, benefiting companies there. European businesses gain an edge since competitors face higher tariffs in the US. This agreement helps strengthen relations between the US and EU during uncertain global times. Yet, some sectors, especially German automakers, are still struggling due to ongoing high US tariffs.

Current Date and Market Implications

Today’s date is 2025-09-10. This trade deal creates a clear divide in European markets that we need to address. Although it seems like a win, the ongoing US tariffs will negatively affect some industries, particularly German automakers. They’ve already seen exports to the US drop by over 12% in the first half of 2025. This bad news signals caution. We should consider buying put options on major German car makers like Volkswagen, BMW, and Mercedes-Benz. Their stocks are likely to perform poorly as the market realizes that tariff relief isn’t coming. The advantages for others translate directly into disadvantages for these manufacturers. On the other hand, we should look into call options for companies benefiting from this “relative advantage,” particularly in sectors with less US competition. French luxury goods companies, like LVMH, are a great example. They face fewer barriers and have already seen a 5% stock increase this week due to these developments.

Profitable Trading Strategy

This difference in performance suggests a pairs trade could be lucrative at the index level. We can short DAX index futures while buying into France’s CAC 40 index. Recent data shows the CAC 40 outperforming the DAX by 4% over the past month, and this deal is likely to widen that gap in the upcoming weeks. Market anxiety about the long-term effects of the deal is rising. The Euro Stoxx 50 Volatility Index (VSTOXX) has climbed to 22, its highest level since early 2024’s market scare. Buying VSTOXX futures or call options is a direct bet on increased market volatility as these new trade dynamics unfold. We recall the instability from the trade wars of the late 2010s and early 2020s. While this deal aims to bring stability, it creates clear winners and losers in Europe. Our strategy must focus on navigating both sides of this division. Create your live VT Markets account and start trading now.

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