Stocks Slip, Investors Eye China Policy Tightening Prospects

Stocks dipped on Thursday as a spike in shortterm Chinese interest rates fanned worries about policy tightening in the worlds secondlargest economy, although improving corporate earnings and easing market volatility helped stem losses.

U.S. bonds extended their decline, boosting the 30year yield to its highest level since March, following stronger economic data and a push in Washington to pass a massive relief plan.

European stocks are expected to be steady to slightly weaker, with Eurostoxx futures down 0.2 and FTSE futures up 0.1.

MSCIs exJapan AsianPacific index fell 1.2, led by drops in South Korea and China, while Japans Nikkei lost 1.1, both snapping a threeday winning streak. U.S. stock futures slipped 0.25 in Asia.

A rise in Chinese shortterm interest rates spooked risk assets, though analysts also noted position adjustments ahead of the Lunar New Year starting next week are likely to play a role too.

Theres persistent speculation that the Chinese authorities may want to tighten its policy, said Wang Shenshen, senior strategist at Mizuho Securities.

Higher interest rates raised worries Chinese policymakers may be starting to shift to a tighter stance to rein in share prices and property markets.

On Wall Street, the SP 500 gained 0.10 while the Nasdaq Composite lost 0.02. The NYSE Fang index of leading tech giants hit an intraday record high, thanks to 7.4 gain in Google parent Alphabet following its strong earnings.

Markets on the whole have calmed…

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