Despite the failure of European leaders to agree to a crucial Greek debt deal this week, Australia's sharemarket still recovered most of last week's losses.
It is now trading back above 4400 points, helped by evidence that US and Chinese growth has picked up.
Meanwhile, the Australian dollar made headlines after the International Monetary Fund said it was thinking about giving the currency a higher profile in central banks' reserve data.
For the week, the benchmark S&P/ASX 200 rose 76.2 points, or 1.7 per cent, to 4413 points, while the broader All Ords gained 71.4 points, or 1.6 per cent, to 4431.5.
The IMF said the Australian dollar might soon be listed as its own entity in central bank holdings, joining a group of reserve currencies that include the US dollar, euro, yen, pound and Swiss franc.
The Reserve Bank governor, Glenn Stevens, said such a move would represent no more than a "classification change" and would have little material effect.
But it still got people talking about the strength of the Australian dollar, which is one of the top five most traded currencies in the world.
In the past three weeks the dollar has been trading between US102.87? and US104.80?. Currency strategists said its emerging status as a "reserve currency" could explain why it has been trading within such a tight range.
"There's a theory going around that the presence of central banks in the market basically 'top and tail' any big price movements in the Australian dollar," ANZ's foreign exchange strategist, Andrew Salter, said.
"The Aussie has been an increasing part of central bank portfolios, that's one of the big stories of 2012, and when central banks add it to their portfolios they have to rebalance their portfolios on a daily or weekly basis to keep the value of their portfolios within the risk limits that are dictated by their mandate."
That means if the Australian dollar appreciates then the value of Australian dollars in central bank portfolios goes up, and in order to bring it back within acceptable limits they have to sell Australian dollars. So if the Australian dollar goes up they sell, and if the Australian dollar goes down they buy, so it compresses the price action. So it's an interesting and developing thing that's happening."
Meanwhile, energy stocks were lower on the sharemarket on Friday, with Santos falling 11? to $10.94.
Beach Energy shares fell 3.5? to $1.40, after the oil and gas producer said its Cooper Basin operations were going well as it ramped up its $400 million growth phase.
Leighton Holdings fell 20? to $16.88 after its former finance manager pleaded guilty to stealing more than $20 million from one of Australia's largest construction and infrastructure companies.
David Jones slipped 1? to $2.43, as the outgoing chairman, Bob Savage, said recent interest rate cuts had yet to work their magic on consumers and get them spending again.
The residential property and housing developer AV Jennings said it would put more new homes on the market in response to what chief executive Peter Summers said were signs of improvement after a difficult year. It last traded at 30?.
with AAP
Frequently Asked Questions about this Article…
How did the Australian sharemarket perform this week and where is the S&P/ASX 200 trading?
The Australian sharemarket recovered most of last week’s losses, with the benchmark S&P/ASX 200 rising 76.2 points (about 1.7%) to 4,413 points. The broader All Ordinaries also gained, up 71.4 points (around 1.6%) to 4,431.5, helped by signs that US and Chinese growth has picked up.
Why is the Australian dollar in the spotlight and what did the IMF suggest?
The IMF said it is considering giving the Australian dollar a higher profile in central bank reserve data — potentially listing it as its own entity alongside other reserve currencies. That comment sparked talk about the Aussie’s strength; the article notes the currency is one of the world’s top five most traded and has been trading in a tight range in recent weeks.
If the IMF reclassifies the Australian dollar as a reserve currency, will that materially affect investors?
According to Reserve Bank governor Glenn Stevens, the move would likely be a ‘classification change’ with little material effect. For everyday investors, that suggests no immediate dramatic impact on markets, though it may influence longer‑term central bank behaviour and how the currency trades.
How could central bank holdings of the Aussie change currency volatility?
Currency strategists in the article say central banks adding the Aussie to their portfolios can compress price action. ANZ’s foreign exchange strategist Andrew Salter explained central banks rebalance holdings (selling when the Aussie rises, buying when it falls), which tends to limit large swings in the currency.
Which energy stocks were weaker and what drove their moves?
Energy stocks were lower on Friday: Santos fell roughly 11% to $10.94, and Beach Energy slipped about 3.5% to $1.40. Beach Energy’s fall followed commentary that its Cooper Basin operations are going well as it ramps up a $400 million growth phase—an operational update investors should watch alongside sector dynamics.
What corporate news hit Leighton Holdings and how did its share price react?
Leighton Holdings dropped about 20% to $16.88 after its former finance manager pleaded guilty to stealing more than $20 million from the company. This kind of corporate governance and legal news can materially affect investor confidence and share price.
How are retailers like David Jones faring and what does management say about consumer spending?
David Jones slipped about 1% to $2.43. The outgoing chairman, Bob Savage, said recent interest rate cuts have yet to stimulate consumer spending, suggesting consumer demand remains a key watch for investors in retail-exposed stocks.
What’s AV Jennings doing in response to the housing market and what should property investors note?
AV Jennings, the residential property and housing developer, said it will put more new homes on the market in response to signs of improvement after a difficult year. For property investors, that indicates the company sees recovering demand and is increasing supply to capitalise on those early signs.
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