Asian equities extend rally as banks rebound

On Wednesday, Asia extended a global equities rally after more pledges of government support soothed worries over the banking sector and provided some much-needed stability after more than a week of upheaval.

With the recent turmoil fuelling hope that it will hold off an expected hike in interest rates, traders were able to focus on the US Federal Reserve'sFederal Reserve's policy decision later in the day due to the dialing down of volatility.

Pressure is building on officials to pause their monetary tightening campaign, with many observers saying several cuts will be done by the end of the year due to the recent crisis, due to the central bank's steep hike in borrowing costs over the past year.

It's important to reinforcing stability and preventing another blow to the Fed's fight against elevated inflation, but it is seen by observers as a crucial step in preventing another blow-up in the financial sector.

The US and European markets surged at least 1 per cent on Tuesday, building on Monday's advances, as investors cheered US Treasury Secretary Janet Yellen's support for lending businesses after the collapse of two regional banks earlier this month.

The downing of Signature Bank and Silicon Valley Bank forced authorities to promise customers that they wouldn't lose their cash in a bid to prevent a run on other firms.

At the American Bankers Association conference in Washington, Yellen said that our intervention was necessary to protect the broader US banking system, and similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.

She stated that the government was resolutely committed to ensuring stability and that the public should have confidence in our banking system. Edward Moya said in a note that it was clear from multiple officials that they are not taking this banking turmoil lightly and that they will probably be proactive when the next major risk arises.