Eurostoxx futures rose by 0.3% in early European trading, reflecting a positive mood in the markets. This upbeat sentiment comes after a recovery from the previous day. French CAC 40 futures also climbed by 0.3%, and Germany’s DAX futures increased by 0.4%. UK FTSE futures rose by 0.4% as well.

Wall Street Resurgence

This increase is partly due to a rebound on Wall Street, which nearly offset Friday’s decline. US futures remain optimistic, supported by hopes that the Federal Reserve will soon lower interest rates. S&P 500 futures saw a 0.2% rise as the new session approached. Markets are feeling positive again, with both European and US futures trending upward. This optimism mainly stems from the belief that the Federal Reserve is close to cutting rates. The recent US jobs report, which showed job growth slowing to 150,000 in July 2025, supports this view. However, even with this good mood, the rebound follows a sharp drop, indicating that investors are still uneasy. This uncertainty makes holding long positions risky, so traders might want to use options to manage their exposure. The VIX index, which measures expected volatility, has dropped toward 14, but its recent spike to 17 highlights how quickly anxiety can return.

European Market Considerations

The rally in Europe is significant, especially given recent data showing that Germany’s industrial production for June 2025 was weaker than expected. This suggests the European Central Bank may have more reason to ease its policies than the Fed, making European indices like the DAX an attractive option. Therefore, buying call options on the Eurostoxx 50 could be a smart move in the coming weeks. We’ve seen similar patterns before, particularly during the market rally in late 2023. At that time, markets surged for months based on expectations that the Fed would change its policy long before any actual rate cuts occurred. This demonstrates how influential market narratives can be, but it also serves as a reminder that sentiment is fragile and relies heavily on future actions by central banks. With the recent July 2025 inflation report showing core CPI cooling to 2.8%, the data supports a continued relief rally for now. Traders in derivatives should think about positioning for further gains but with clear risk management. Strategies such as buying call options or implementing bull call spreads on indices like the S&P 500 allow for participation while also protecting against sudden changes. Create your live VT Markets account and start trading now.

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