Eurostoxx futures are up 0.4% in early European trading. German DAX futures have also risen by 0.4%, while UK FTSE futures gained 0.3%. Stakeholders are looking closely at the US-EU trade deal, although European leaders have indicated that they are not too happy with it. While a worse scenario was avoided, the announcement did not boost European stocks yesterday.

US Futures Overview

US futures have seen a small rise of 0.2%. This is helped by tech shares, as major earnings reports are expected later this week. With the market remaining cautious, the current low volatility presents an opportunity. The VIX index, a measure of market fear, has been around multi-year lows, currently at about 12. This is much lower than the long-term average of around 20. This indicates that options contracts are relatively cheap, making it a good time to buy protection against sudden market drops. In Europe, it’s wise to hedge existing long positions. Even though indices like the German DAX have risen over 9% this year, there’s still a risk of negative sentiment due to ongoing dissatisfaction with the trade deal. Buying put options on the Eurostoxx 50 can help secure those gains, particularly with the VSTOXX volatility index also low, offering affordable insurance against a possible market pullback.

US Market Technology Focus

The focus in the US markets is on the technology sector’s earnings, which have been driving the S&P 500’s rise. Expectations are incredibly high, with some major chipmakers expected to report revenue growth of over 400% year-over-year. We recommend using options strategies like straddles to profit from large price swings, as even a slight earnings miss could lead to big sell-offs. Historically, trade negotiation periods, such as the disputes from 2018–2019, have led to sharp market reversals driven by headlines. This history shows that relying solely on the current upward trend can be risky. Thus, we are using this calm phase to build defensive positions that limit downside risk, rather than aggressively adding new long positions through futures. Create your live VT Markets account and start trading now.

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