Regional stocks rise as fears of a US rate hike ease

Regional markets found some relief on Friday as the dollar weakened and bond yields eased. Comments from US Federal Reserve officials helped calm fears that the Fed would raise interest rates at its meeting this month.

Thailand’s SET index staged a notable rebound, closing at 1,595.58. It still stayed below the 1,600-point mark, but ended the week up 0.5%, supported by stable inflation and a stronger baht. Foreign investors led buying with net purchases of 3.03 billion baht, followed by retail investors with 1.52 billion baht. Institutional investors were net sellers of 2.58 billion baht, while brokerage firms sold 1.97 billion baht.

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The Middle East would not last too long.

The broader market remained focused on inflation and central-bank policy. Eurozone inflation rose to a three-year high of 3.3% in August from 2.9% in July, keeping pressure on the European Central Bank despite a reading well above its 2% target. The US trade deficit expanded 24.4% in July to $88.6 billion, its highest level in 16 months, as strong domestic demand boosted imports.

Elsewhere, the yen rose to a one-month high of 155.28 per dollar as traders weighed the possibility of further currency intervention and rising expectations for a Bank of Japan rate increase later this month. Japan’s benchmark bond yield reached 3% for the first time since 1996, underscoring how rate and fiscal concerns are reshaping markets. South Korean exports climbed 69% year on year to nearly $100 billion in August, driven by semiconductor demand, while Nvidia agreed to acquire AI startup Hugging Face for $13 billion. German automaker Volkswagen and its unions agreed on a cost-cutting plan that would eliminate 50,000 jobs by 2030, bringing total planned losses to 100,000 over the decade.

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The Bank of Canada kept its key policy rate at 2.25% as expected.