European indices showed little change at the week’s start. The Eurostoxx, Germany’s DAX, France’s CAC 40, and the UK’s FTSE each gained 0.1%. In contrast, Spain’s IBEX dropped by 0.1%, and Italy’s FTSE MIB slipped by 0.6%. Stellantis reported a net loss of €2.3 billion in the first half of the year, mainly due to tariffs. Meanwhile, S&P 500 futures rose by 0.2%, which points to a steady market mood. Attention is now on the upcoming US-EU trade talks before the August 1 deadline. Tech stocks are poised for earnings reports from Google/Alphabet and Tesla later this week.

Market Opportunities

In the cautious atmosphere Low describes, we view the current calm as a chance for investment. The Euro Stoxx 50 Volatility Index (VSTOXX) is nearing a three-month low around 14, making options more affordable. This is a prime time to buy protection or prepare for a big market shift before it happens. The August 1 deadline for US-EU trade talks brings potential risks that the market might not fully account for. In the past, trade deadlines, especially during 2018-2019, caused sharp spikes in volatility, regardless of the outcomes. We recommend that traders consider buying straddles on the Germany 40 index to profit from a significant move once a decision about steel and aluminum tariffs is reached. The carmaker’s loss also signals important opportunities in certain sectors. Recent data from the European Automobile Manufacturers’ Association (ACEA) shows a 2.6% drop in new car registrations in the EU during the first half of the year, highlighting ongoing weaknesses. As a result, we are looking to buy put options on the STOXX Europe 600 Automobiles & Parts index to guard against further tariff-related impacts.

Impact of US Tech Earnings

While European economic factors are crucial, we shouldn’t overlook US tech earnings, as they often influence global growth stocks. A strong earnings report from a company like Alphabet could boost the entire tech sector, including European firms like SAP and ASML. For this reason, we find good value in short-dated call options on European technology ETFs to benefit from any positive effects coming from the US. Create your live VT Markets account and start trading now.

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