(Bloomberg) — Emerging market stocks rose as traders grew increasingly optimistic that the U.S. economy can avoid a recession while expecting the Federal Reserve to begin cutting interest rates next month, which should give riskier assets a boost.

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An index of developing-country stocks rose for all but one session this week, gaining more than 2.8 percent. Asian companies contributed the most to Friday’s rise, including Taiwan Semiconductor Manufacturing Company, Samsung Electronics Co and Alibaba Group Holding.

While key US inflation data this week reinforced speculation that the Fed would start cutting borrowing costs as early as September, traders revised their bets after a series of subsequent figures underscored the economy’s strength. The Fed’s rate cut is likely to boost demand for riskier assets.

Meanwhile, optimistic investors have taken advantage of the sell-off last month and early August to add to or build positions in a variety of asset classes, including emerging market equities and bonds, said Rajeev De Mello, chief investment strategist at Gama Asset Management.

“We are on the verge of entering an easing cycle in the US, and a 25 basis point rate cut in September is almost certain,” he said.

Emerging market currencies also gained on Friday, with the South African rand leading the way. The currency rose for a ninth straight day, its longest rise since 2011. The country’s assets have rebounded since a pro-business coalition took power two months ago and economic data began to improve. Inflation has fallen since February, easing pressure on the central bank to keep interest rates high.

In Latin America, Brazilian assets were temporarily boosted by stronger-than-expected economic data and comments from President Luiz Inácio Lula da Silva that his nominee for the country’s central bank post would raise interest rates if necessary, but gains largely faded over the course of the session.

Lula’s comments follow signals of a more aggressive stance from local politicians and ease fears of a more dovish policy at a time when inflation expectations are not yet anchored. Central bank governor Gabriel Galipolo, who is expected by some to succeed the monetary authority as president later this year, has said a rate hike is up for debate as all board members are doing everything they can to bring inflation to target levels.

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“What has helped Brazil’s local markets recently has been the feeling that the BCB board is more unified in its message,” said Bret Rosen, economist and Latin America strategist at EMSO Asset Management.

The additional yield that investors demand for owning dollar-denominated emerging market government bonds instead of U.S. Treasuries has fallen back to 400 basis points after rising in early August, according to JPMorgan Chase & Co.

– With support from Leda Alvim and Wojciech Moskwa.

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