Meetings held in Geneva, London, and Stockholm were successful. Talks included the possibility of a meeting with Trump, with plans for coordination among the leaders’ teams. Beijing has stressed its sovereignty and highlighted its security and energy needs, especially regarding oil imports from Iran. Currently, there is little leverage over China concerning Iranian oil, although outside forces could shift China’s economy towards consumer spending.

EU Trade Relationship Investment Monitoring

The EU’s trade relationship, which includes $600 billion in investments, will be closely watched. Despite potential changes in tariff rates, the EU is expected to keep its promises, with a significant portion of investments likely going towards defense and agriculture. Snap back tariffs are seen as manageable if negotiations continue among the countries involved. We are noticing a positive change in Europe, with rising diplomatic and economic sentiments. The Eurozone Sentix investor confidence index for July 2025 reached its highest point in a year. Additionally, volatility in the Euro Stoxx 50 (VSTOXX) has dropped below 15. This suggests that traders might cautiously sell out-of-the-money puts on European indices like the DAX, indicating reduced tail risks for now.

Transatlantic Investment Opportunities

The possibility of a $600 billion transatlantic investment and trade package is an important driving force. We expect a large share to focus on defense, particularly since over 20 NATO members are meeting their 2% of GDP spending targets, a significant increase from previous years. Derivative traders should consider call options on defense ETFs like ITA or PPA, as well as on agricultural commodities that will benefit too. The risk of “snap back” tariffs should be seen as a negotiation tactic rather than a looming disaster. This presents opportunities for volatility traders who remember the market swings in 2018-2019 during trade discussions. We think buying straddles or strangles on major indices during calm periods can be a smart way to prepare for upcoming headline risks. China’s shift to a consumer-focused economy continues to face challenges without external pressure. Recent data from late July 2025 shows China’s retail sales grew by just 2.9%, much lower than expected, while industrial production remains strong. This supports a strategy of buying puts on Chinese equity ETFs like FXI or MCHI, as the weak domestic demand is a major concern. In terms of energy, the US has little leverage on the China-Iran oil trade, which helps keep crude prices steady. Brent crude remains above $85 a barrel, and tanker tracking data confirms that Iranian oil exports to China have stayed consistently above 1.5 million barrels per day through mid-2025. Traders might consider options on oil ETFs like USO to prepare for price stability or possible gains due to geopolitical tensions, as this supply seems secure. Create your live VT Markets account and start trading now.

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