US figures provide impetus

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

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

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

For the week, the benchmark S&P/ASX200 index gained 64.8 points, or 1.2 per cent, to 5386.3 points, while the broader All Ordinaries index rose 64.7 points, or 1.2 per cent, to 5385.7 points.

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 the Fed might increase the pace of its monthly bond-buying program.

Treasurer Joe Hockey confirmed the federal 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 NAB up 49¢, or 1.4 per cent, at $36.08. Commonwealth Bank rose 70¢ to $76.28, Westpac gained 18¢ at $34.36 and ANZ climbed 29¢ at $32.66.

The three-way fight over ownership of Warrnambool Cheese and Butter continued with Canadian diary group Saputo lifting its takeover offer to $449 million, trumping bids from local food companies, helping its shares rise 27¢ at $8.42.

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

Rail and stevedore operator Asciano slumped 31¢, or 5 per cent, to $5.90, after it warned earnings growth would be weaker in the 2013-14 financial year.

with wires