The local share market has finished slightly higher amid reports US politicians were close to avoiding a catastrophic default, but the stand-off has still led to the worst week in two months for the bourse.
The benchmark S&P/ASX200 index finished Friday up 16.6 points, or 0.23 percent, to 7,154.8, while the broader All Ordinaries closed up 18.2 points, or 0.25 percent, to 7,334.9.
But after losses every other day this week, the ASX200 finished the week down 1.71 percent, its worst week since mid-March, amid the debt-ceiling stalemate.
But Reuters, Bloomberg, and the New York Times were reporting on Friday that a deal was taking shape which would raise the debt ceiling for two years, with various provisions that would allow both Democrats and Republicans to claim some sort of victory.
Negotiators were beginning to draft the legislative text of an agreement, according to the Times, although some details were still up in the air.
AMP chief economist Shane Oliver warned there was still the potential for more setbacks and it could take a further share market fall – which would impact both global and Australian equities – to ensure a deal was passed by Congress.
“Agreeing too early would not go down too well with either sides’ base – so a last minute deal with argy bargy along the way was always most likely,” he wrote in an analysis.
A deal might result in a short-term bounce but over the next few months the market looks vulnerable, Mr Oliver added, pointing to banking stress, weakness in industrial commodities, soft leading economic indicators in the US and Australia, and doubts about China’s recovery.
“We remain of the view that shares will do okay on a 12-month view as central banks ease up as inflation cools but the next few months are likely to be rough,” he said.
Tech was the ASX’s best-performing sector on Friday, buoyed for a second day by enthusiasm over artificial intelligence after chipmaker Nvidia’s rosy quarterly earnings report led to a 1.7 percent overnight rally on the Nasdaq.
Tech companies collectively gained 1.6 percent with printed circuit board company Altium adding 3.6 percent, NextDC growing 3.5 percent and Appen climbing 1.2 percent as new-ish chief executive Armughan Ahmad used an artificial intelligence chatbot to welcome investors to the AI training company’s annual general meeting in Sydney.
Fisher & Paykel Healthcare was the worst performer among the ASX200, falling 6.3 percent to a four-month low of $22.48 after the New Zealand respiratory products company announced a full-year profit of $NZ250m, down 34 percent from last year and $5m under expectations.
“The second-half result was encouraging as market conditions progressed towards more of a normal state and both of our Hospital and Homecare product groups delivered good growth,” managing director and chief executive officer Lewis Gradon said.
The heavyweight mining sector was up 0.9 percent after five straight days of losses amid concerns about China’s recovery.
BHP gained 1.4 percent to $42.75, Fortescue Metals added 3.3 percent to $19.62 and Rio Tinto climbed 2.3 percent to 107.77.
All of the Big Four banks finished higher, with NAB the best performer, adding 0.7 percent to $26.23.
ANZ and CBA both gained 0.5 percent, to $23.47 and $98.16, respectively, while Westpac edged 0.1 percent higher to $20.92.
Latitude Financial Group fell 3.5 percent to a seven-week low of $1.25 after the personal finance company said it was unlikely to pay a half-year dividend and had set aside $46 million to pay for fallout from the massive hack of customer data from its systems in March.
Humm Group fell 8.2 percent to 39c after its buy now, pay later subsidiary received an interim stop order from the securities regulator temporarily forbidding it from signing up new customers.
The Australian dollar was buying 65.22 US cents, from 65.34 US cents at Thursday’s ASX close.