Another surge in demand for the four major banks following Commonwealth Bank's cash-splash for shareholders drove the Australian sharemarket through 5000 points to within touching distance of its post-GFC high, but once again small cap stocks were left lagging far behind.
Finishing off the day's high, the S&P/ASX 200 index climbed 44.7 points, or 0.9 per cent, to 5003.7 points after a solid bounce in February consumer confidence and Commonwealth Bank narrowly beat forecasts but boosted its dividend by 20 per cent.
The Westpac Melbourne Institute Index of Consumer Sentiment rose 7.7 per cent in February for its strongest reading since December 2010 as interest rate cuts and the recovery in the sharemarket lifted the gloom.
"Last time it (S&P/ASX 200) broke through 5000.00 it only managed to hold above it for a day , thus traders are concerned today's exuberance following the consumer confidence data may have overextended a push higher and are fearful of a possible retracement," Forex.com analyst Chris Tedder said.
In tokyo the Nikkei index fell 1.1 per cent while Chinese markets were closed for public holidays this week.
Overnight the US S&P 500 index edged up 0.2 per cent to a fresh five-year high on a swing in earnings optimism, while president Barack Obama's state of the union address after the close had little impact on the US dollar.
Markets also paid little attention to warning US Democrats and Republicans were nowhere neara deal on reaching an agreement to end $US1.2 trillion ($1 trillion) in spending cuts scheduled to begin on March 1 that could slash US growth by 0.6 per cent this year.
Currency trading was choppy after the G7 statement initially sent the yen lower on the understanding the G7 endorsed Japan's policies to weaken the yen. However, a later report said markets misinterpreted the statement and the G7 was concerned about the volatile nature of the yen's depreciation over the past two months
The Australian dollar bounced from its overnight low of $US1.0230 to $US1.0360 as global risk appetite improved and investors trimmed hopes for a March rate cut.
Copper climbed 0.2 per cent to $US8245 a tonne, while gold rose $US6 to $US1651 an ounce.
More to come