European indices show early gains as Eurostoxx futures rise 0.8% and DAX increases by 0.7%
by VT Markets
/
Jul 17, 2025
Eurostoxx futures rose by 0.8% in early European trading, bouncing back after a day of declines in European indices. In contrast, US stocks had posted gains recently.
German DAX futures increased by 0.7%, and UK FTSE futures went up by 0.1%. Market mood seems to be stabilizing as attention shifts to upcoming trade talks between the US and EU before the August 1 deadline.
Market Stability
We think the rise in Eurostoxx and DAX futures signals a temporary stability rather than a long-term trend. The Euro Stoxx 50 Volatility Index (V2X) has recently been low, around 13, making options relatively cheap. This is a good time to buy protection against any surprise downturns.
The negotiations between the US and EU are crucial, especially for indices that rely on exports. The recent German ZEW Economic Sentiment index, which dipped to 47.1 in June from 47.5, indicates some weakness in Europe’s largest economy. Traders should keep this in mind when making decisions around DAX-related instruments.
Historically, calm periods before major deadlines often lead to spikes in volatility. We saw similar patterns during the trade disputes of 2018-2019, where headlines caused sudden market shifts. Therefore, holding short-volatility positions could be risky in the coming weeks.
Inflation and Market Implications
Inflation data adds complexity for traders. Although the European Central Bank cut rates in June, May’s Eurozone inflation unexpectedly rose to 2.6%. This uncertainty could affect future easing efforts and limit further gains in equities, impacting any bullish strategies.
Given these mixed signals, we recommend using options structures that define risk. Buying put spreads on the Eurostoxx 50 could provide a cost-effective way to hedge against a moderate downturn. This strategy allows traders to benefit from the current calm while being ready for a potential change in market mood.
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by VT Markets
Jul 17, 2025
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