Market ends week on a five-year high

The sharemarket closed on another five-year high on Friday, up another 0.5 per cent, despite a looming fiscal deadline in the US that could threaten to shutdown the government.

Stocks that have recently been underperforming lifted the market to its seventh-consecutive week of gains.

Healthcare, utilities and telco stocks all posted gains on Friday, helping to offset the weak showing from the major banks and resources companies.

For the week, the benchmark S&P/ASX 200 Index gained 30.4 points, or 0.6 per cent, at 5307.1, while the broader All Ordinaries Index gained 31.4 points, or 0.6 per cent, at 5302.3.

US policymakers must agree on a new funding resolution by October 1 to avoid government services grinding to a halt. The US debt ceiling will also need to be raised by mid to late October to avoid the US government partially defaulting on its obligations.

But market watchers seemed unperturbed by these matters on Friday, believing US political leaders would likely reach agreements in time.

"We have seen this movie before in 2011 with the fiscal cliff and after the usual nerve-racking political argy-bargy, some sort of last-minute deal is likely," AMP's Shane Oliver wrote to clients.

"With the US budget deficit having fallen to 4 per cent of GDP [from a 2010 peak of more than 10 per cent], it's harder for the Republicans to push too hard without risking causing a crisis that just alienates the public, which they probably don't want to do ahead of mid-term elections next year."

Dr Oliver also provided some interesting statistics. There were 17 US government shutdowns between 1976 and 1996, and they have had a mixed impact on markets. "In fact, the 32-day shutdown over late 1995 to early 1996 actually saw US shares gain 0.5 per cent," Dr Oliver wrote.

The Reserve Bank has released its half-yearly Financial Stability Review, taking the opportunity to warn households and banks to remain prudent with their borrowing and lending practices, particularly in this record low-rate environment.

And the Bureau of Statistics released its June quarter financial accounts data this week. They showed that net purchases of Australian equities were weak from every investor group except superannuation funds.

They also showed that foreigners started to sell more of their Australian dollar holdings, putting the currency under pressure, as interest in other developed markets gained precedence.

"Households continued to show at best only modest interest in equities, and though they are channelling more savings through superannuation, they seem more attracted to property than shares," Citi's Tony Brennan said. "Super funds, in turn, while still buyers of equities, have also moderated their purchases over the past year."

For the week, ASX shares fell 57¢, or 1.6 per cent, at $34.76, after the company's chairman said it was regrettable that two ASX board members had become involved in a regulatory scandal in the US. The scandal led to their resignation from the board of Australian market operator two weeks ago.

Macquarie Group slipped $1.10, or 2.2 per cent, at $48.90. The investment firm said it still expects its profit to rise in the current fiscal year, so long as financial market conditions continue to improve.

Newcrest Mining fell $1.63, or 12.4 per cent, at $11.47. Newcrest executives are bracing for more pay cuts as the troubled goldminer outlines plans to keep bonuses to a minimum.