European Commission President Ursula von der Leyen spoke about how artificial intelligence is changing global tech competition. She mentioned signing initial pilot projects for AI gigafactories and emphasized the need for more public and private investment. Von der Leyen highlighted issues like job losses to non-market economies and expressed her desire for competitiveness to be prioritized, similar to defense. The Commission aims to turn Mario Draghi’s competitiveness report into real policies and actions.

Main Areas of Focus

The report targets three main areas: closing the innovation gap, creating a unified strategy for decarbonization and competitiveness, and reducing dependencies. These areas are seen as key to strengthening the EU’s role in the global tech market. A clear message is that we can expect a significant increase in public and private investment to enhance European competitiveness. This signals a push for growth in specific sectors driven by policy. Traders should consider gaining exposure to European technology and industrial indices ahead of these anticipated investments. The emphasis on AI and gigafactories directly affects technology and semiconductor sectors. Reports this year indicate that private funding for AI projects in the EU has surged by over 20% in the first half of 2025. We expect this policy initiative will act as a major boost. Buying call options on important European tech stocks or ETFs like the STOXX Europe 600 Technology index could capture this expected growth. This policy also aims to cut dependencies, highlighting key industries and supply chains for green technology. We saw wild price swings in materials like lithium and cobalt during the 2022-2023 supply chain crisis. Building domestic gigafactories will likely increase the demand for these resources. Traders might consider using futures contracts to speculate on rising industrial metal prices or options on leading European automotive and battery companies.

Commitment to Decarbonization

The commitment to decarbonization strengthens the case for the European green energy sector and its related markets. With EU carbon allowances (EUA) futures trading near €95 per tonne, any new investment plans will likely push these prices even higher. We should think about buying long-dated call options on renewable energy utilities and ETFs that focus on clean energy. This strong policy shift will likely lead to short-term market volatility as capital moves between sectors. When the NextGenerationEU fund was announced in 2020, targeted sectors saw a significant rally, but the broader market was also choppy. We might consider buying protection or speculating on an increase in the VSTOXX index, Europe’s main measure of market volatility, to hedge against these changes. In the coming weeks, the strategy should focus on building positions through call options that expire in December 2025 and March 2026. This timeframe allows enough space to gain from the initial policy announcements and the beginning of investment programs. Using bull call spreads can be a budget-friendly way to express a positive view while managing risk. Create your live VT Markets account and start trading now.

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