Sharemarket pushes fresh five-year high

The sharemarket closed on a five-year high this week as investors welcomed news of better than expected quarterly earnings from US companies, and as the Reserve Bank said non-mining investment could soon pick up.

The sharemarket closed on a five-year high this week as investors welcomed news of better than expected quarterly earnings from US companies, and as the Reserve Bank said non-mining investment could soon pick up.

It helped the market defy falls in Asian markets on Friday, with investors happy to put the US debt ceiling debacle well behind them.

Reserve Bank deputy governor Philip Lowe said this week that investment in the non-mining parts of the economy was at its lowest point since the early 1990s recession. But he was optimistic things would soon pick up thanks to a falling Australian dollar, low interest rates and improving business confidence.

For the week, the benchmark S&P/ASX 200 Index gained 64.8 points, or 1.2 per cent, to 5386.3, while the broader All Ordinaries Index rose 64.7 points, or 1.2 per cent, to 5385.7.

Speculation about the US Federal Reserve's future money printing behaviour enjoyed various permutations this week, making daily shifts in tone from concerns about the likely date of Fed "tapering" to concerns that the Fed may actually increase the pace of its monthly bond buying program.

Treasurer Joe Hockey confirmed the government's budget position had deteriorated since the last release in August - at that time, the value of "peak debt" was expected to be about $370 billion but the "peak" was now expected to be "above $400 billion".

UBS analyst Andrew Lilley said that implied a downgrade to the budget balance of more than $30 billion over the forward estimates, raising the risk of a credit downgrade for the Commonwealth.

"[But] while the risks have risen, we regard Australia's AAA/'stable' rating as still safe," Mr Lilley said.

"Its projected debt at the end of financial year 2014 remains well below that of the average AAA sovereign, despite the increase in issuance."

On Friday, the major banks made positive gains, with National Australia Bank the best performer, up 49¢, or 1.4 per cent, to $36.08.

Commonwealth Bank rose 70¢ to $76.28, Westpac gained 18¢ to $34.36, while ANZ climbed 29¢ to $32.66.

The three-way fight over ownership of Warrnambool Cheese and Butter continued with Canadian dairy giant Saputo lifting its takeover offer to $449 million, helping shares to rise 27¢ to $8.42.

In the resources sector, BHP Billiton gained 6¢ to $37.41, Rio Tinto shed 8¢ at $63.77, and Fortescue Metals Group gave up early gains to shed 9¢ to $5.21.

Whitehaven Coal added 3.5¢ to $1.77 after lifting coal sales by 26 per cent in the September quarter.

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