On 28 August 2025, Asian economic data is not expected to have a major market impact, as global developments are prioritised over local statistics. Meanwhile, discussions surrounding global trade tensions are intensifying with the United States pushing for a 15–20% minimum tariff on all EU goods, and Mexico’s plans to increase tariffs on China.
In corporate news, Nvidia released its earnings report with an EPS of $1.05, which was higher than the expected $1.01. Nvidia’s stock closed at $181.60, a decline of 0.09%, and further dropped to $175.39 post-market, marking a 3.42% decrease.
Market Indices and Cryptocurrency
The S&P 500 and Nasdaq both increased by 0.2%, and the Dow rose 0.3% in anticipation of Nvidia’s earnings. Solana (SOL) surged 8% to $209, outperforming Bitcoin’s 2% gain.
Foreign exchange trading remains uncertain, with a noted high risk and potential for significant loss. Participants are reminded to assess their risk tolerance and seek professional advice as needed. Investors are cautioned against relying solely on provided opinions or analyses for decision-making, acknowledging past performance doesn’t assure future results.
With Nvidia dropping to near $175 in after-hours trading despite an earnings beat, we believe the positive news is now fully priced into the tech sector. Unlike the explosive post-earnings rallies we saw back in 2023 and 2024, this reversal signals that extreme optimism is now a significant risk. Traders should consider buying put options on the Nasdaq 100 ETF (QQQ) to hedge against a potential tech-led downturn in the coming weeks.
The renewed talk of a 15-20% tariff on EU goods and new Mexican tariffs on China is creating serious headwinds for the market. We have seen this playbook before; during the 2018-2019 trade disputes, the VIX index frequently spiked above 20 on tariff news, rewarding those who bought volatility protection. Buying VIX call options or futures could be a prudent move to prepare for the increased choppiness that these trade wars will likely create.
Strategic Concerns and Defensive Positions
We are seeing a divergence where stock indices are hitting highs while currency markets are choppy and traders are unsure. This uncertainty, coupled with a strengthening US dollar, makes us cautious. A continued rise in the Dollar Index (DXY) above the 105 level, a threshold it struggled with in late 2024, could put further pressure on equities and commodities.
Given these cross-currents, derivative strategies should focus on capital protection over the next few weeks. The market seems to be ignoring geopolitical risks, creating an opportunity for traders to establish defensive positions cheaply. We think using collar options, where you sell an out-of-the-money call to finance the purchase of a protective put, is a sensible strategy for major index holdings like the SPY.
