European stocks declined after nearing record highs in the previous session amid optimism about US monetary easing. The Stoxx 600 index fell by 0.3%, dragged down by a 15.5% drop in Danish company Ørsted’s shares. The German DAX index dropped 0.5%, and the French CAC 40 fell 0.4%. Recent remarks by Federal Reserve Chair Jerome Powell about a possible interest rate cut in the near term during his Jackson Hole speech boosted European stocks, which had closed at their highest level in over five months. Powell’s comments opened the door for a rate cut at the Fed’s September 16-17 meeting and highlighted upcoming job and inflation reports. Traders now price in about a 90% chance of a rate cut in September, up from around 75% before Powell’s speech. Swissquote’s Chief Analyst Ipek Ozkardeskaya said, “The Fed’s readiness to cut rates by at least 25 basis points, as expected, is generating considerable enthusiasm.

Generally, when the Fed leans towards easing, it is positive for global financial markets.”