US Futures Mixed, VIX Up; Euro Rises on Rate Expectations, China Output Slows

Lead US equity futures are mixed in European midday trading. Nasdaq futures are up 0.55%, while Dow futures are down 0.07%. The VIX, a measure of market volatility, has increased by 5.05%. The Euro is strengthening, trading near $1.160, as markets adjust expectations for Federal Reserve and European Central Bank rate decisions. China's industrial output growth has slowed to 4.5% year-on-year, missing forecasts. Session narrative European cash markets are seeing mixed performance, with US equity futures reflecting a similar trend. Nasdaq futures are showing strength, up 0.55%, and S&P futures are also in positive territory, gaining 0.18%. In contrast, Dow futures are slightly down by 0.07%. The Russell 2000 futures are up 0.04%. Volatility is on the rise, with the VIX increasing by 5.05%. The US Dollar Index is down 0.26%, contributing to the Euro's appreciation, which is now trading near $1.160. This move in the Euro is attributed to shifting market expectations regarding interest rates, with reduced bets on a Fed rate hike this year and an 84% probability priced in for an ECB 25-bps hike in September. Geopolitical concerns are also in focus, with reports of traffic halts in the Strait of Hormuz as a 60-day US-Iran ceasefire expires. This has contributed to UK natural gas prices rising above 154 pence a therm. China's economic data shows industrial output growth slowing to 4.5% year-on-year, below the 5% forecast, and new home prices falling 3.2% year-on-year. However, the China NBS states solid conditions support the annual growth target. Bitcoin is consolidating around $63,500 following recent outflows from US-listed spot Bitcoin ETFs. Cross-asset check In fixed income, the US 10-year yield is up 1.19% at 4.7%. Long-duration Treasuries are down 0.62%. In commodities, WTI crude is up 0.17% at $82.54, and Brent crude is up 0.55% at $89.01. Gold is up 0.48% at $4458.7, silver is up 1.14% at $65.85, and copper has gained 1.29% at $6.7. Natural gas is down 2.85% at $2.66. Agricultural commodities are mixed, with soybeans rallying near $11.8 on Chinese demand, while rice is down 1.51% and wheat is lower by 0.52%. Cocoa futures are rising toward $5,800/ton on a weaker dollar and falling inventories. Themes & continuing stories Geopolitical tensions in the Middle East continue to be a significant theme, with the expiration of the US-Iran ceasefire and its impact on the Strait of Hormuz. This is affecting energy markets and global shipping. Monetary policy expectations are driving currency movements, particularly the Euro's strength against the US Dollar, as markets reprice the likelihood of rate hikes from the Fed and ECB. China's economic performance remains a key focus, with recent data showing a slowdown in industrial output and falling home prices, despite official assurances of meeting growth targets. What’s ahead Market participants will continue to monitor developments in the Middle East for any further escalation or de-escalation of tensions. The focus will also be on upcoming central bank communications for further clues on monetary policy trajectories, especially from the ECB. Economic data releases from major economies, particularly China, will be closely watched for signs of economic health and potential policy responses.