Eurostoxx futures have fallen by 0.7% in early trading in Europe. The German DAX futures dropped by 0.9%, the French CAC 40 futures decreased by 0.6%, and the UK FTSE futures dipped by 0.2%.

US Markets Outlook

US futures are also down at the start of the session. Trade tensions, especially after recent tariff announcements, are raising market worries. Major companies like Apple and Amazon have reported earnings that reveal possible tariff effects. Currently, S&P 500, Nasdaq, and Dow futures are all down by 0.3%. As we begin August 2025, the risk-off sentiment is clear, driven by renewed trade war fears. The CBOE Volatility Index (VIX), known as the market’s fear gauge, has surged over 15% this week, now trading near 21.5—its highest level in three months. This indicates that traders are buying protection against potential losses. With pressure on European markets, especially German industries, traders may want to consider buying put options on the Eurostoxx 50. This week’s German IFO Business Climate index dropped to 88.1, its lowest this year, showing that manufacturing sentiment is weak. These put options can serve as a hedge against declines caused by tariff threats to European automotive and industrial goods.

Opportunities Amid Volatility

This situation resembles the market volatility seen during the 2018-2019 trade disputes. Back then, uncertainty lingered for months, creating trading opportunities. Taking long positions in VIX futures or VIX call options might be a smart way to profit from the expected market swings in the coming weeks. Traders should also focus on specific companies that rely heavily on international supply chains, like Apple. The company’s recent earnings call indicated that new tariffs could squeeze margins, a concern now reflected in the stock prices. Buying puts on vulnerable tech and retail stocks may be a more focused strategy than shorting a broad index like the Nasdaq 100. Additionally, tariff discussions are boosting the US dollar as a safe-haven asset, putting pressure on the Euro. The EUR/USD exchange rate has already dipped to a five-week low of 1.0750. Derivative traders might consider EUR/USD put options to bet on a continued drop towards the 1.06 level seen earlier this year. Create your live VT Markets account and start trading now.

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