The market rallied strongly towards the end of the week as the US stockmarket hit another record high, and as the Bank of England and European Central Bank kept their interest rates at record lows.
Meanwhile, the Rudd government unveiled a larger than expected budget deficit on Friday, prompting economists to predict further rate cuts.
The benchmark S&P/ASX 200 Index rose 74.8 points, or 1.5 per cent, to 5116.8 points this week, while the broader All Ordinaries Index rose 74.9 points, or 1.5 per cent, to 5098.7.
The ASX 200 has now closed higher for two weeks in a row, while the All Ordinaries has closed higher for six weeks in a row.
The federal government said on Friday that the budget deficit had jumped in the past two months from the $18 billion forecast in the May budget to $30.1 billion in 2013-14, as it struggles to deal with a surprise revenue write-down of $33 billion over the next four years.
The unemployment rate is expected to rise above 6 per cent this year, making it higher than at any time during the financial crisis.
But the government says it has identified $17.4 billion in budget cuts, describing them as "responsible savings".
According to economists, the budget deficit could have been worse without those cuts.
"What the government has chosen to do is a limited amount of extra taxes and a limited amount of spending cuts ... the outcome would have been worse if no changes were made," St George senior economist Hans Kunnen said.
"There is no easy way out. Assets were sold by previous governments to pay down debt. That option is no longer available. Improved economic growth would help. [And] further large-scale stimulatory spending does not appear to be on the political agenda."
For the week, Amcor rose 24¢, at $10.79, after the global packaging group said the time was right to split its Australasia and Packaging Distribution business from its other operations.
Crown jumped 56¢, to $13.26, after the casino operator shook up its senior management team in a move in which its Perth resort boss was promoted at the expense of his Melbourne counterpart.
Rio Tinto rose $2.07, to $59.31, after the mining giant agreed to sell its majority stake in a NSW copper and gold mine to a Chinese company.
Whitehaven Coal slipped 17¢, to $1.96, as falling coal prices dampened the effect of a strong increase in the company's production.
Woolworths slipped 4¢, to $33.57, after the retail giant's sales grew 4.3 per cent to more than $59 billion last financial year.
AGL Energy rose 1¢, to $14.75, on news that the largest solar power project in the southern hemisphere would be built in NSW with funding from the state and federal governments and the energy company.