European indices had mixed results. Germany’s DAX and the UK’s FTSE 100 stayed the same, while France’s CAC, Spain’s Ibex, and Italy’s FTSE MIB showed gains. Most major indices went up throughout the week, but the UK lagged behind. Here are the daily changes: the German DAX remained stable, France’s CAC increased by 0.44%, the UK’s FTSE 100 fell slightly by 0.06%, Spain’s Ibex rose by 0.91%, and Italy’s FTSE MIB climbed by 0.56%. Over the week, the UK FTSE 100 had a small increase after the Bank of England adjusted interest rates.

European Market Performance

The German DAX saw a 3.28% rise, its largest gain since late April. France’s CAC also rose by 2.61%, the highest increase since late April. The UK’s FTSE 100 grew by a modest 0.30%. Spain’s Ibex surged by 4.94%, and Italy’s FTSE MIB increased by 4.21%, both marking their biggest gains since mid-April. Meanwhile, US stock indices rose as European markets closed. The Dow increased by 127 points (0.29%), the S&P rose by 37.73 points (0.60%), and the NASDAQ gained 164 points (0.78%). We are witnessing a strong upward trend in mainland European markets, especially in Spain and Italy. This rise is likely driven by positive economic news, such as Germany’s ZEW Economic Sentiment survey for August, which exceeded forecasts. Traders may consider buying call options on indices like the German DAX or Spain’s Ibex to take advantage of this trend. The UK market is the clear exception, lagging behind others despite the Bank of England’s recent interest rate cut. This highlights concerns about the UK’s economic health, as the GDP growth for Q2 2025 was a mere 0.1%. We could look at pairing trades, such as going long on the stronger German DAX and shorting the FTSE 100, to profit from this gap in performance.

Strength in Southern European Markets

Spain’s IBEX and Italy’s FTSE MIB are showing significant strength, with their largest weekly gains since mid-April 2025. Spain’s performance is supported by record tourist numbers, with July 2025 seeing more international arrivals than the previous highs in 2023. In these markets, bullish strategies like selling out-of-the-money put options can help collect premiums while betting on further gains. As this rally continues, implied volatility has decreased, with the VSTOXX index—Europe’s main volatility gauge—trading near yearly lows around 14. This means options are relatively inexpensive, offering a good chance to buy protective puts on profitable long positions. It’s wise to remember that late August and September have historically been rough months for stocks, so adding a hedge is a smart strategy. Looking ahead, the next key events will be the flash Eurozone PMI figures and the UK’s July inflation report, both coming in the next two weeks. Any unexpected signs of a slowdown could quickly impact the current positive mood. Therefore, we should stay flexible and ready to adjust our positions based on new information. Create your live VT Markets account and start trading now.

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