The share market regained break-even for the week as winners from a decline in borrowing costs outweighed falls in oil companies and miners.
The S&P/ASX 200 climbed 24 points or 0.33 per cent to 7293, within three points of where it opened on Monday.
Gains in Goodman Group, Wesfarmers and CSL helped outweigh declines in Woodside, ANZ and two of the big three iron ore producers.
What's driving the market
Bond proxies and growth stocks advanced as the yield on ten-year Australian government bonds dived almost nine points to its lowest since February. Earlier this year, yields surged dramatically in a sign bond markets were increasingly anxious about the implications of inflationary pressures on central bank policy.
Yields that traded below 1 per cent in January almost doubled to 1.92 per cent by late February, triggering sharp dislocations in equities. Since that peak, yields - effectively the cost of borrowing for issuers - have fallen steadily as central banks rushed to reassure investors they expected this year's spike in inflation to be temporary as the economy catches up from last year's slump.
ANZ this morning joined the growing number of economists predicting the Reserve Bank will have to raise rates sooner than current guidance. ANZ's research team now expects the cash rate to rise to 0.5 per cent in two steps by the end of 2023 as inflation settles within the RBA's 2 -3 per cent target range. The RBA's current stance is it does not anticipate raising the cash rate from a record low 0.1 per cent until 2024 at the earliest.
"The economy has improved much faster than anticipated," ANZ Head of Australian Economics, David Plank, said. "While there will no doubt be bumps on the road, we think the conditions the RBA has set out for a rate hike will be met in 2023. This will be great news, even if it does mean higher interest rates."
The market has struggled to hold its gains this week despite a string of intraday records. Each session the index has risen in early trade, only to give back some or all of its advance by the close.
Investors have been reluctant to hang around while Wall Street treads water. Overnight, the Dow dropped 0.44 per cent to a third straight loss. US trade this week has been characterised by weak volumes and low volatility as the summer holiday season dulls participation.
Real estate investment trusts compete with bond markets for investment flows and have been one of the main beneficiaries of the decline in yields. The sector climbed more than 2 per cent this morning to its highest level of the pandemic era.
SCA Property Group rallied 3.2 per cent, Charter Hall 3.12 per cent and Dexus 2.82 per cent. Goodman Group, the biggest of them all, rose 1.63 per cent to its highest since 2008.
The tech sector was the morning's other big mover, rising 1.14 per cent. EML Payments gained 3.04 per cent, Nextdc 1.58 per cent, WiseTech 0.97 per cent and Xero 1.48 per cent.
Woolworths bounced 0.61 per cent after the competition regulator, the ACCC, said it would not oppose the supermarket chain's proposed investment in PFD Food Services. Woolworths will now acquire a 65 per cent equity interest in the family-owned food distributor.
Iress surged 9.13 per cent despite dousing media speculation an outside investor was building a stake in the finance software maker. The company said it had not received any direct approach.
PointsBet rose 0.67 per cent after inking a deal to provide online and retail sports wagering in Maryland.
Energy stocks declined with oil. Brent crude retreated 67 cents or 0.93 per cent this morning to US$71.55 a barrel. Oil Search fell 2.38 per cent, Woodside 1.39 per cent and Santos 1.43 per cent.
The major miners pared losses as the morning wore on. BHP trimmed its fall to 0.41 per cent. Rio Tinto dipped 0.16 per cent. Fortescue Metals edged up 0.33 per cent.
Building supplies firm Boral eased 1.16 per cent after recommending shareholders reject an offer from Seven Group for the shares Seven does not already hold. Chair Kathryn Fagg said the offer "materially undervalues" Boral. Shares in Seven Group declined 0.69 per cent.
Austal's run of positive announcements ended with news the Australian Securities and Investments Commission had commenced civil penalty proceedings against the shipbuilder. ASIC alleges Austal failed its continuous disclosure obligations by waiting a month in 2016 to tell investors of a material write-back of work in progress. The share price dropped 3.45 per cent. The company announced two contract wins in the US this week.
ANZ sank 0.31 per cent during a mixed session for the banks. CBA gained 0.57 per cent, NAB 0.23 per cent and Westpac 0.19 per cent.
Asian markets kicked higher. The Asia Dow climbed 0.52 per cent. China's Shanghai Composite added 0.49 per cent, Hong Kong's Hang Seng 0.54 per cent and Japan's Nikkei 0.41 per cent.
US futures gave chase. S&P 500 futures rose six points or 0.14 per cent.
Gold faded $7 or 0.37 per cent to US$1,888.50 an ounce.
The dollar was unchanged at 77.29 US cents.