Solid US jobs data sparked another positive day on the Australian sharemarket but the muted bond market response and US closure for the Independence Day holiday tonight kept a lid on sentiment.
The S&P/ASX 200 index followed the 0.5 per cent overnight rally on Wall Street with a 33.7 point, or 0.61 per cent, gain to 5525 after the 288,000 increase in US non-farm payrolls in May revived sagging growth optimism.
However, after the knee-jerk equity market response, US 10-year yields reversed to finish just one point up at 2.63 per cent after deeper analysis revealed gains were in part-time jobs while full-time jobs tumbled.
The mood was further dampened by a drop in the ISM services index to 56 points from 56.3, indicating the rebound in jobs could lose momentum in coming months.
“When you look at the payroll data and draw a conclusion as to the type of consumable fire power that it unleashes you are not filled with an abundance of confidence,” Westpac strategist Graeme Jarvis said.
“Combine that feeling with the information just received from both sets of ISM data and it is getting harder and harder to see the massive polar vortex expansion that has been hinted at for so long.”
The Australian dollar was steady at US93.60¢ but Government 10-year yields climbed 4.3 points to 3.583 per cent.
The Shanghai composite index was off 0.2 per cent at the close of the ASX.
In Tokyo the Nikkei index was up 0.5 per cent.
Dalian iron ore futures slipped 0.5 per cent following the 2 per cent leap in spot iron ore to $US96.50 a tonne yesterday.
Copper climbed 0.7 per cent to $US7175 a tonne and gold slipped $US3 to $US1319 an ounce.
Investors appeared to be moving on from recent worries caused by profit downgrades from several retailers, Morgans private client adviser Alistair McCorquodale said.
"The new senate is now sitting and we are starting to see some resolution to some of those budgetary issues and a bit more certainty,” he said.
"As the market can see that certainty lining up I think it’s prepared to keep buying up."
The ASX200 and All Ordinaries indices rose by 1.5 per cent for the week, the first of the new financial year.
Iron ore prices rose strongly to $US96.50 a tonne, boosting the miners.
BHP Billiton added 34 cents to $37.57, Rio Tinto rose by 15 cents to $62.60 and Fortescue Metals gained five cents to $4.68.
The major banks also rose, with National Australia Bank adding 42 cents to $33.73, ANZ rising 14 cents to $33.78, Westpac lifting 21 cents to $34.40 and Commonwealth Bank closed 40 cents higher at $81.95.
Telstra gained six cents to $5.34 amid speculation the telco might announce a $2 billion share buyback.
The only areas of weakness were in the property sector and among some industrials, such as Transurban, which lost 12 cents to $7.62.
The broader All Ordinaries index was up 32.3 points, or 0.59 per cent, at 5511.8.
The September share price index futures contract was 29 points higher at 5482, with 21,539 contracts traded.
National turnover was 2.1 billion securities worth $4.1 billion.