Eurostoxx futures dropped by 0.1% in early European trading. The mood is calm as traders focus on month-end activities after a mixed performance the day before. German DAX futures and French CAC 40 futures also fell by 0.1%. UK FTSE futures are stable and show no changes.

August Trading Environment

This week has not been great for European stocks as traders wrap up August trading. Despite the downturn, most countries saw positive monthly returns, except for France, which is facing political issues. U.S. futures are also cautious, with S&P 500 futures down by 0.1% after small gains yesterday. The slight drop in Eurostoxx and U.S. futures indicates that the market is waiting for August to end. Trading volumes are low, typical for late summer, which means that even small news can lead to bigger price changes. Traders should be careful with their positions now since the true market direction may become clearer in September. This week’s uncertainty is partly due to new economic data. The preliminary Eurozone inflation report for August 2025 was 2.4%, slightly above the expected 2.2%. This persistent inflation suggests that the European Central Bank may not rush to cut interest rates, dampening enthusiasm for the equity market for now. Recent comments from central bankers emphasize patience in policy, which affects overall sentiment. Implied volatility, shown by the VSTOXX index, is rising to about 16, even with a calm market. This signals that options traders are preparing for possible big moves in early September, making long volatility strategies like straddles appealing.

Market Sentiment And Strategies

The weak performance of French stocks is a point of concern. Ongoing political debates about the upcoming autumn budget add challenges for the CAC 40 that Germany doesn’t face. Derivative traders might consider put options on the CAC 40 as protection or a bearish bet against this uncertainty. Historically, the upcoming period can be difficult for markets. Records from the 2010s and early 2020s show that September tends to be weak for stocks. This seasonal trend, along with current inflation worries, supports the idea of seeking protection, such as buying out-of-the-money puts on the Eurostoxx 50 index to guard against a potential downturn. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now