The sharemarket gained ground after US politicians voted to raise the debt ceiling and reopen the government.
But the gains were muted because the market had mostly priced in the likelihood of a short-term resolution.
At the close on Thursday, the benchmark S&P/ASX 200 Index was up 20.2 points, or 0.38 per cent, at 5283.1, while the broader All Ordinaries rose 17.5 points, or 0.33 per cent, to 5281.9.
President Barack Obama has signed a measure into law reopening the US federal government and averting a potential default, ending a two-week partial shutdown of public services.
CMC analyst Ric Spooner said the news dominated the local market. "It's not an overly large movement and the market had built a zero defensive premium into the price running into this," he said.
"While there has been a bit of a relief rally, it hasn't been too loud."
Mr Spooner said the release of positive local business confidence data had also buoyed investors.
The banks posted solid gains. ANZ rose 21¢ to $31.69, Commonwealth Bank added 67¢ to $73.43, National Australia Bank was up 53¢ at $35.64 and Westpac put on 41¢ to $33.62.
The big miners were mixed, with BHP Billiton up 2¢ at $35.80, Rio Tinto down 40¢ at $63.71 and Fortescue Metals down 16¢ at $5.24.
Goldminer Newcrest lost 6¢ to $10.14 despite beating expectations to produce 586,573 ounces of gold during the September quarter.
Woodside Petroleum fell 52¢, or 1.4 per cent, to $38 after quarterly revenue fell 0.5 per cent to $US1.338 billion.
Ten Network lost half a cent to 28.5¢ after its full-year loss blew out to $285 million.
Shares in building products maker Boral rose 28¢ to $5.03 after it entered a partnership with a US company to create a $US1.6 billion plasterboard and ceilings venture.
The dollar was trading slightly firmer at US95.52¢ late in the session, up from US95.25¢.
Bond futures prices also edged higher on expectations the US Federal Reserve would have to keep its economic stimulus plan in place despite a debt deal being reached. It now buys $US85 billion of US treasuries each month.
UBS interest rate strategist Matthew Johnson said the US debt agreement would have normally caused bond prices to fall, but expectations about the stimulus program changed that.