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Market analysis shows bearish pressure on the S&P 500, highlighting key trading levels
The SPX closed at 6,502.09 on September 4, showing a slight bearish trend despite an overall upwards movement. A price above 6,510.8–6511.0 indicates a bullish stance, while a dip below 6,507.5 signals weakness. The option delta was negative at –2,133, suggesting a mild bearish edge, but the averages were nearly balanced.
In the options market, the delta imbalance hints at bearish sentiment. Traders are advised to wait for price confirmation at critical levels of 6511 and 6507.5. With the non-farm payrolls report coming out, the SPX is staying within a range, presenting a chance for short-range trading and better risk management.
Eurozone’s Q2 GDP grew by 0.1% quarter-on-quarter and 1.5% year-on-year, unexpectedly.
The Eurozone’s GDP grew by 0.1% in the second quarter of 2025, matching expectations. Year-on-year, growth was at 1.5%, slightly better than the expected 1.4% and equal to the previous period.
Household spending rose by 0.1% in the euro area and by 0.3% in the EU, continuing past trends. Government spending increased by 0.5% in the euro area and 0.7% in the EU, recovering from earlier declines.
Economic Indicators
Gross fixed capital formation dropped by 1.8% in the euro area and 1.7% in the EU, moving away from earlier gains. Exports fell by 0.5% in the euro area and 0.2% in the EU, reversing prior growth. Imports stayed the same in the euro area but grew by 0.3% in the EU after previous increases. Markets are now looking ahead at economic forecasts rather than focusing on past quarterly data. The Eurozone’s 0.1% growth in Q2 confirms the slowdown we expected after the +0.6% growth recorded in Q1. This stagnation is largely due to a big drop in business investment and falling exports. The data indicates the economy is struggling, relying mainly on government spending. Looking forward, weak performance is supported by recent indicators. The flash manufacturing PMI for August 2025 fell to 48.5, marking its third month in downturn territory. This suggests the weakness from Q2 has likely worsened in Q3.Central Bank Challenges
This situation poses challenges for the European Central Bank (ECB). After raising its key deposit rate to 3.0% in July 2025, the market may now expect no further rate hikes and even consider possible future cuts. We believe the ECB’s tough stance is no longer credible given the current economic climate. For equity index traders, a cautious approach with instruments like the EURO STOXX 50 is advised. Buying put options could be a good hedge against a downturn as corporate earnings forecasts are officially lowered. The significant 1.8% decline in capital formation is a strong warning sign of future weakness. This data suggests higher volatility in the coming weeks. A similar situation was seen in the 2011-2012 period when slowing growth data led to a spike in the V2X index. Traders should brace for wider trading ranges and more unpredictable markets. Overall, this environment is negative for the Euro, making short positions in EUR/USD futures or buying put options appealing. On the other hand, we expect German bund futures to perform well as investors seek safety and anticipate a softer ECB. The trend for yields seems to be downward from here. Create your live VT Markets account and start trading now.Retail sales in Italy held steady in July, defying expectations, with varying performance across categories.
In July, Italy’s retail sales stayed the same, surprising many who expected a 0.4% rise.
Over the three months leading up to July, retail sales grew by 0.6% in value and 0.1% in volume.
Year-On-Year Sales Growth
Compared to last year, retail sales climbed 1.8%, up from a previous estimate of 1.1%. In comparison to July 2024, large-scale distribution saw a 2.8% increase, small-scale retail rose by 0.6%, and non-store sales went up by 0.9%. Online sales grew by 2.9% year-on-year. Among non-food items, cosmetics and toiletries increased by 3.7%, while electric household appliances and audio-video equipment dropped by 3.1%. The lack of growth in Italian retail sales is concerning. It indicates that European consumers are losing steam. This flat performance, below expectations, suggests our earlier hopes for a strong third quarter might not be realistic. This serves as a warning sign for European stocks focused on the domestic market. Consumer weakness stems from the European Central Bank’s policies, which have kept interest rates above 3.5% for over a year. This data could push the ECB to consider rate cuts sooner than expected, possibly before the end of 2025. This is different from the US Federal Reserve, which is taking a more cautious approach.Bearing In Mind Market Volatility
The Italian report isn’t alone; it follows last week’s news of a decline in Germany’s manufacturing PMI, which dropped to 48.5. Together, the slowing Italian consumer and weak German industry create a gloomy outlook for the Eurozone. We are entering a period of slowdown that seems to be quickening as autumn approaches. In light of this, buying put options on the FTSE MIB index may be wise, as it is highly influenced by domestic demand and the banking sector. The weak growth in retail suggests that the actual economic activity is weaker than reported. Historically, these kinds of discrepancies, similar to those seen in the slowdown of 2023, often foreshadow market corrections. This uncertainty can also lead to increased market volatility. The VSTOXX index, which measures volatility in Europe, has already risen to 15.6 this morning due to this news. Buying call options on the VSTOXX for October 2025 could be a smart way to benefit from the expected increase in market fluctuations. Moreover, the data is likely negative for the Euro. With a dovish ECB expected, we should consider short positions against the US dollar. Purchasing EUR/USD put options offers a way to limit risk while betting on the currency’s decline from its current level of around 1.09. The report also points to a cautious consumer who prefers cosmetics over pricey household appliances. This indicates a potential strategy: buying puts on consumer discretionary companies reliant on bigger sales while buying calls on consumer staples. This approach allows us to take advantage of the evident shift in spending habits. Create your live VT Markets account and start trading now.Dividend Adjustment Notice – Sep 05 ,2025
Dear Client,
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
Consumer confidence in Switzerland falls to -39.9, below the expected -36.5
SECO’s latest report reveals that Switzerland’s consumer confidence index has fallen to -39.9, worse than the expected -36.5. The previous reading was -32.8, signaling a downward trend in confidence.
After a low point in April, consumer confidence started to rise but began to drop again in June. One reason may be the high tariffs affecting Switzerland, which have hurt economic feelings.
Consumer Confidence Declines
The latest drop in consumer confidence is notably larger than predicted, continuing a negative trend since June. This shows that households are more worried about the economic future. Such concerns often lead to reduced spending, which can slow down the Swiss economy. This weak sentiment is backed by recent data. For example, retail sales in August 2025 fell by 0.8% compared to the previous month. Additionally, the latest manufacturing PMI slid just below the 50-point mark, indicating a contraction. With these trends, it’s unlikely the Swiss National Bank will raise interest rates anytime soon, suggesting a weaker Swiss Franc ahead.Implications for Traders
For derivative traders, this situation presents an opportunity to buy put options on the Swiss Market Index (SMI) to prepare for a potential stock market decrease. Companies that depend on Swiss consumers, particularly in retail and banking, are especially vulnerable now. A similar scenario occurred during the economic uncertainty in early 2023, where stocks focused on domestic markets underperformed. In currency trading, the economic outlook supports positions that profit from a declining franc. Long positions in currency pairs like EUR/CHF and USD/CHF are becoming more appealing. Using call options on these pairs could be a smart way to bet on franc weakness while minimizing risks. The high tariffs on important Swiss exports, which have been a major concern this year, are starting to affect sentiment beyond just businesses. Although a weaker franc usually aids exporters, the tariffs are cutting into their profits. This situation makes us wary about even large multinational companies, typically insulated from domestic economic shifts. Create your live VT Markets account and start trading now.France’s trade balance was €5.56 billion worse than expected, despite an improvement from previous figures
France’s trade balance for July shows a deficit of €5.56 billion, which is better than the expected deficit of €6.1 billion.
Last month, the trade balance was initially reported as a deficit of €7.62 billion but has been updated to €7.16 billion.
Improved Trade Balance
France’s trade balance for July is narrower than economists predicted, with the deficit at -€5.56 billion. This is a mildly positive sign for the French economy, indicating better export performance or lower demand for imports. This may give us some unexpected support in our forecasts. This news boosts French equities, making call options on the CAC 40 index worth considering. It’s particularly interesting since Germany’s IFO business climate survey in late August showed ongoing pessimism in manufacturing. France might be showing more resilience compared to Germany. As for the Euro, this one data point won’t change the overall trend. The recent Eurozone inflation rate for August is at 2.3%, still above the ECB’s target. The European Central Bank is likely to focus more on this overall inflation number rather than on two-month-old trade data from one country. Thus, we don’t expect any big changes in ECB policy just from this report.Market Implications
With these mixed signals—French strength against German weakness and ongoing inflation—implied volatility in European assets may rise. Traders could consider strategies like buying straddles on the Euro Stoxx 50 index to profit from significant price changes in either direction without needing to predict the outcomes of these conflicting data. It’s important to remember how sensitive European trade figures were to energy prices during the 2022-2023 period. The improvements we’re seeing now suggest that supply chains and energy dependencies are stabilizing. We should keep an eye on this resilience in European economic data for the rest of the year. Create your live VT Markets account and start trading now.Germany’s industrial orders dropped 2.9% in July, defying expectations of a 0.5% increase
In July 2025, Germany’s industrial orders dropped by 2.9%, while a rise of 0.5% was expected. Earlier, the orders had been adjusted from a decline of 1.0% to a smaller decrease of 0.2%.
When we exclude large orders, there was a 0.7% increase from the previous month. Over the three months from May to July 2025, new orders rose slightly by 0.2% compared to the prior three months.
Impact Of Transport Equipment Sector
The fall in manufacturing orders in July is largely due to a 38.6% decrease in the ‘manufacture of other transport equipment’ sector. This area includes aircraft, ships, trains, and military vehicles. The unexpected 2.9% drop in German industrial orders is putting pressure on European assets. This morning, DAX futures slid below 17,500, and the EUR/USD pair weakened, nearing 1.0650. This news aligns with concerns from last week’s German manufacturing PMI, which remained below 44. However, the overall figure can be misleading due to a significant drop in the often-volatile transport equipment sector. Excluding these large orders shows a healthier 0.7% increase, indicating that the core industrial economy isn’t as weak as initially thought. This suggests the market’s quick sell-off might be an overreaction, creating an opportunity to profit from overstated volatility. Given these insights, we’re considering selling out-of-the-money puts on the DAX index for short-term gains. Another option is to short VSTOXX futures, anticipating that implied volatility will decrease as the market processes the report. The stable three-month average supports the idea that the overall trend is not one of severe decline.ECB Meeting Considerations
This report will be crucial for the European Central Bank’s meeting next week. With Eurozone inflation at a stubbornly high 2.7% in August, this weak growth data from Germany makes aggressive rate hikes less likely. This could support equity markets in the upcoming days, making outright short positions riskier. We’ve seen similar patterns in the lead-up to 2020, where fluctuations in aircraft and military orders caused misleading monthly reports that didn’t reflect the broader economic picture. The market tends to overlook these volatile elements over time. History suggests that buying during dips or selling puts against them has often been a successful strategy. Create your live VT Markets account and start trading now.UK retail sales rose by 0.6% in July, surpassing expectations despite fluctuating growth.
In July, UK retail sales increased by 0.6% compared to the previous month, beating the expected growth of 0.2%. Year-on-year, sales rose by 1.1%, which was slightly lower than the anticipated 1.3%. The previous month’s figures were revised to show a growth of 0.3% month-on-month and 0.9% year-on-year.
When excluding cars and fuel, retail sales grew by 0.5% month-on-month, surpassing the expected 0.4%. On a year-over-year basis, this segment saw a 1.3% increase, slightly above the predicted 1.2%. The prior month’s growth was also adjusted to 0.6%.
Reasons for Retail Sector Growth
Retail sales volumes dropped by 0.6% when comparing the three months leading up to July 2025 with the prior three months. This decline ended a four-month growth period. Non-store retailers and clothing stores enjoyed significant growth, thanks to new products, decent weather, and increased consumer activity from the UEFA Women’s EURO 2025. Despite the positive retail numbers, the Bank of England is likely to center its focus on inflation and its wider economic impact. Reflecting on the July retail sales data from our current perspective in early September 2025, the monthly growth seems to be a temporary event. The positive figures were mainly influenced by one-off occurrences like the Women’s EURO tournament and favorable weather. The revised data from the previous month and the negative trend over three months point to a deeper underlying weakness among consumers. The main issue for UK markets is persistent inflation. The most recent figures for August 2025 show the headline Consumer Price Index (CPI) at 3.5%, well above the Bank of England’s target of 2%. This keeps pressure on the Bank to maintain a cautious stance before its next meeting later this month.Inflation and Consumer Confidence Concerns
This indicates that the Bank of England will likely overlook the temporary strength in July’s retail report. Consumer confidence surveys support this view, with the latest GfK reading for August falling to -30, highlighting widespread pessimism among households about their finances. This disconnect between retail sales and overall consumer confidence is a concerning sign for the UK economy. As a result, we view the short-lived strength of the British pound after July’s data release as a fading moment and a missed selling chance. Strategies predicting further weakness of sterling against the US dollar should now be considered, as the UK’s stagflation seems to be deepening. Options that protect against GBP/USD falling below 1.22 in the coming months could be significant. This outlook also influences our view on UK equities, especially the domestically-focused FTSE 250 index. The strain on UK consumers indicates tough circumstances for companies in retail and hospitality sectors as autumn approaches. Maintaining bearish positions in these sectors, reminiscent of the challenging economic times in 2022 and 2023, should be evaluated. Create your live VT Markets account and start trading now.Japan’s July leading economic index meets expectations at 105.9, indicating slight improvement with wage growth.
The Japan Cabinet Office has published the latest data for the leading economic index for July, which stands at 105.9. This matches the expected value and is an increase from the previous index of 105.6.
In contrast, the coincident index fell to 113.3, down from 116.7. These indices help us understand Japan’s economic trends and recent changes.
Latest Reports on Economic Indicators
New reports show improvements in Japanese PMIs and wage growth. These factors together offer a clearer view of Japan’s economic situation. Although the slight rise in the July 2025 leading index suggests some optimism, the significant drop in the coincident index signals current economic weakness. This mixed message indicates that we shouldn’t expect bold policy changes from the Bank of Japan anytime soon. For now, this data suggests a cautious wait-and-see stance from the central bank. This inaction from the BoJ keeps interest rates wide apart between Japan and other major economies, especially the United States. Japan’s core inflation for July 2025 remained at 2.8%, but with the weak coincident index, a rate hike before the end of the year seems unlikely. Thus, we see continued weakness for the yen, making long positions in USD/JPY appealing through futures or call options.Impact on Equities and Market Strategies
A weaker yen benefits Japanese equities, particularly the large exporters in the Nikkei 225 index. The strong wage growth observed in the 2025 spring negotiations, averaging over 4.5%, should also lead to increased consumer spending. Traders might consider buying call options on the Nikkei 225, betting that a weak yen and higher domestic demand will boost corporate profits. However, the conflicting data adds uncertainty, which could increase market volatility. The VIX on the Nikkei has remained relatively low, around 17.5 in August 2025. This environment is optimal for strategies that profit from price movements, such as buying straddles on the index ahead of the upcoming BoJ meeting later this month. Reflecting on the past, the market reacted strongly when the BoJ ended its negative interest rate policy in early 2024. The current uncertain data makes further moves less predictable, heightening the importance of upcoming inflation and GDP reports. This sensitivity means that unexpected data releases could trigger considerable market movements, benefiting those prepared for increased volatility. Create your live VT Markets account and start trading now.Today’s key events include UK retail sales, Eurozone GDP, and important employment reports from the US and Canada.
In the European session, the only important economic data comes from the UK Retail Sales. However, this is not likely to influence the Bank of England’s decisions or the market, as all eyes are on the US Non-Farm Payroll (NFP) data coming out later today.
The American session will highlight Canadian employment numbers and the US NFP report. The NFP is crucial because it affects interest rate expectations and global markets.
