Eurostoxx futures are stable in early European trading. German DAX futures are down by 0.1%, French CAC 40 futures are up by 0.1%, and UK FTSE futures are also down by 0.1%. Last week, European indices finished weakly, while Wall Street saw strong gains, hitting record highs thanks to tech stocks. This upward trend looks strong, with attention shifting to US data that could affect market views on the Federal Reserve. As the week starts, US futures are slightly down by 0.1%.

Pause in Market Momentum

European markets are opening flat, marking a pause in the market’s momentum. This comes after a period where US tech stocks pushed indices to new heights, while European indices lagged behind. The small decline in US futures today indicates that traders are becoming more cautious. There’s a noticeable gap between the booming US market and Europe’s slower performance. Last week’s German manufacturing PMI report for August 2025 showed a reading of 48.5, still below the growth mark, indicating contraction. This presents an interesting opportunity for a pair trade: buying call options on the Nasdaq 100 while also considering put options on the German DAX. The market’s continuous rise is fueled by hopes that the Federal Reserve will cut interest rates soon. However, with the Fed Funds rate at 4.75% and August 2025 CPI data showing stubborn inflation at 3.4%, any negative news could impact the market. Upcoming US jobs and retail sales data will be crucial to either support this rally or prompt a sharp drop.

Opportunity to Hedge

This quiet start to the week has pushed the VIX, which measures expected market volatility, down to about 14. For traders, this means options are relatively affordable right now. This is a good time to consider buying protective measures, like S&P 500 put options, to guard against potential downturns if US data turns out disappointing. We’ve seen similar patterns before, especially looking back to late 2023 and early 2024. During that time, stocks also rose sharply on the *hope* of future Fed rate cuts, well before they actually occurred. History shows that these rallies fueled by optimism can quickly reverse if economic data fails to meet expectations. Create your live VT Markets account and start trading now.

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