(Oct 14) : Asian stocks looked set for broad gains on Wednesday after US equities recovered from session lows on signals that the Federal Reserve may not need to raise interest rates aggressively next year.

Equity-index futures for Japan and South Korea advanced, while those for Australia edged lower. The S&P 500 closed little changed and Treasuries rallied after New York Fed President John Williams said he continues to see one more rate hike as appropriate this year, but currently sees no need for further tightening in 2027. The dollar fell.

A selloff in chipmakers also eased, with a sector gauge trimming its loss to 0.2%. Microsoft Corp. rose to a record, while the Nasdaq 100 Index fell 0.3%.

US oil edged higher after Brent crude steadied following three sessions of gains. Saudi Arabia intercepted more missiles and drones launched by Yemen’s Houthis on Tuesday, with fighting against the Iran-backed group showing few signs of easing.

Williams’ comments came ahead of a key US inflation report that may help determine how quickly the Fed moves again. Higher gasoline costs probably pushed headline inflation higher in September, while an easing in underlying price pressures may give policymakers more room to wait before tightening further.

“Confirmation that underlying inflation moderated last month would allow the Fed to approach the timing of its next rate hike with patience rather than urgency,” said Ian Lyngen at BMO Capital Markets.

As the US earnings season got underway, JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. set a fresh record in the third quarter for how much they earned from lending, with customers continuing to borrow even as interest rates increased.

At Goldman Sachs Group Inc., equity traders beat expectations, while fixed-income and rates trading fell well short of Wall Street estimates.

Still, stock traders appear largely sanguine. The S&P 500 Index hasn’t suffered a 1% decline in 53 trading sessions through Tuesday, marking the longest such stretch since January 2020, data compiled by Bloomberg show. 

“Such a long streak of tranquility is certainly surprising, given all of the renewed fears swirling around rising interest rates, a spike in bond yields and elevated oil prices the past few months,” said Thomas Martin, senior portfolio manager at Globalt Investments LLC. 

In Asia, Indian stocks will be in focus after Finance Minister Nirmala Sitharaman said she’s open to discussions about a transaction tax on share trading as the country seeks to boost capital inflows. The Nifty 50 extended gains as she spoke Tuesday, closing 1.6% higher for its biggest advance in more than two months.

Elsewhere, the yen was little changed in early trading after people familiar with the matter said Bank of Japan officials are leaning against a rare back-to-back interest-rate increase this month, while keeping open the possibility of another move as soon as December.

In the US, Williams’ comments pulled Treasury yields lower, with the two-year yield almost erasing a three-basis-point rise. He expects inflation to slow “quite a bit” toward the Fed’s 2% target next year as the effects of tariffs and an energy shock fade, reducing the need for further tightening.

“I haven’t changed my view that it may be appropriate to have one more rate hike,” Williams said Tuesday in an interview with Bloomberg News at the New York Fed. “I don’t think at this time I have any reason to believe that we would need to do more” after that.

uploaded by Isabelle Francis