A better than expected start to earnings season and a rise in metals prices kept the Australian sharemarket afloat earlier this week, despite losses later on.
Increased uncertainty about when the US Federal Reserve will start trimming its $US85 billion a month stimulus and a disappointing growth outlook from ANZ Bank weighed heavily on the market on Friday, pushing it down 0.8 per cent.
But for the week, the benchmark S&P/ASX 200 Index finished 58.6 points, or 1.2 per cent, higher at 5100.12 points. The broader All Ordinaries firmed 61.36 points, or 1.2 per cent, to 5100.12.
Monday and Tuesday set up the gains, with Commonwealth Bank and blood product maker CSL nudging the market almost 2 per cent higher on the expectation of strong earnings reports.
By Wednesday things soured slightly. CBA may have announced a $2 dividend, but was missing a special dividend that analysts were hoping for. Its net increase for the week was 0.6 per cent to $73.30.
CSL forecast slower profit growth in the year ahead, driving the stock down 4 per cent to $63.35.
The gold miners were the big winners, with the metal rising to a two-month high at $US1372.51 on Thursday night.
St George Bank chief economist Besa Deda said investors appeared to be treating gold as its traditional safe haven, with geopolitical tensions flaring again in Egypt and fears of unrest spreading to other Middle Eastern countries. Ms Deda said the metal was also being used as a hedge against inflation as talk of the Fed tapering continued.
The number of Americans looking for a job fell to its lowest since 2007, cementing beliefs that the Fed will start winding back its stimulus next month. "That suggests growth might be stronger in the future and so will inflation pressures," Ms Deda said. The increased speculation hammered the Australian dollar, which rose above US92¢ this week, to as low as US90.58¢ on Thursday night. It managed to regain support, and rally almost a cent by Friday's close.
NAB economist Tony Kelly said while the US Fed was expected to start reeling in its stimulus, he expected the central bank to merely announce its intention to do so next month and start actually cutting back before the end of the year.
Gold explorer Perseus was the best performer on the ASX, rising 48.1 per cent to 78.5¢, while OceaniaGold rose 26.7 per cent to $2.05. The world's fifth-biggest gold producer, Newcrest, rallied 9.5 per cent to $12.57, despite reporting an annual net loss of of $5.78 billion for the 12 months to June 30.
A 14-day rally in the price of iron ore ended on Friday with the metal falling 1.1 per cent to $US141.2 a tonne in Thursday night trade. Nevertheless, analysts remained bullish about its prospects on the back of strong economic data from China.
RBS Morgans analyst Violeta Todorova expected August to be a big month for iron ore, following strong demand in July.
As a result, index heavyweight BHP Billiton finished the week 2.6 per cent higher at $36.87. However, Rio Tinto was flat, down 0.3 per cent to $60.08.
Consumer staples took a knock, with Wesfarmers, the owner of Coles and Bunnings, finishing the week down 1.3 per cent at $40.22. The conglomerate was one of the few companies to miss analysts' expectations, reporting a $2.26 billion profit on Thursday, up 6 per cent on the previous year.