The Australian sharemarket edged up to a fresh five-year high as fund managers rotated to defensive stocks ahead of the September-quarter end.
The S&P/ASX 200 index closed 12.6 points, or 0.24 per cent, up at 5307.1 points, with strong gains in utilities, telcos and healthcare stocks offsetting weakness in gold miners.
Overnight Wall Street ended its losing streak despite little headway being made in the US debt standoff off between President Barack Obama’s Democratic Party and Republicans, with a government shutdown next week increasingly likely.
“Financial markets are in limbo at present, with no clear trends evident. Profit taking is seen as contributing to the slide in equities over the past five days, after the Fed’s ‘no change’ to QE decision last week but overnight US equities staged a mild recovery,” National Australia Bank economist Robert Henderson said.
US weekly jobless claims fell more than expected, and US 10-year bond yields rose 3 points to 2.66 per cent, as the data swung the pendulum back towards the US Federal Reserve beginning to taper its bond purchasing program this year.
However, Fed board remembers continued to reflect the deep divide in the world’s most influential central bank.
Minneapolis Fed president Narayana Kocherlakota said the Fed should follow the European example of pledging to do “whatever it takes” to aid growth, and although eurozone manufacturing data has improved off depressed lows, distrust across the region remains evident.
Eurozone M3 money supply has been on the slide again this year, and remains a quarter of levels prior to the GFC as bank lending continues to decline, mostly notably in Spain and Italy.
New York Fed president William Dudley said the Fed would face “communications and operational challenges” and “unexpected consequences” when it eventually began to unwind record stimulus.
The Australian dollar dropped back 0.5¢ to US93.50¢ while government 10-year yields were little changed at 3.877 per cent.
The Shanghai composite index was off 0.2 per cent at the close of the ASX, while in Tokyo the Nikkei index lost 0.4 per cent.
The broader All Ordinaries index was up 14.1 points, or 0.27 per cent, at 5,302.3.
On the ASX 24, the December share price index futures contract was four points higher at 5,309, with 27,175 contracts traded.
CMC Markets analyst Michael McCarthy said trading had been very light as investors spread their risk.
"Shares that drove the market higher today were those that underperformed the market over the course of this week,” Mr McCarthy said.
"It did look like there was some spreading across the market."
Telstra lifted six cents to $5.02 and TPG added four cents to $4.37.
Investors pushed Origin Energy’s shares up 18 cents to $14.47, despite the competition watchdog taking legal action over the company’s door-to-door sales practices.
AGL shares increased by 25 cents to $15.68.In the health sector, CSL gained $1.03 to $65.54, Sonic Health Care gained 26 cents to $16.20 and Ramsay Health Care was six cents higher at $36.35.
Mining giant BHP Billiton finished one cent higher at $36.36 but Rio Tinto was 10 cents lower at $63.29.
The big four banks were weaker, with ANZ down four cents at $31.52, Commonwealth five cents lower at $73.16, Westpac dropped seven cents to $33.30 and National Australia Bank closed 22 cents weaker at $35.11.
National turnover was 1.4 billion securities worth $5.6 billion.