The share market hit an intraday record before moderating its gains, coming within a whisper of its highest finish amid growing expectations the Reserve Bank will cut rates in February.
The benchmark S&P/ASX200 index on Thursday finished up 46.7 points, or 0.55 per cent, to 8,493.7, just 1.5 points from its best-ever finish set on December 3.
In early afternoon trading the index climbed as high as 8,515.7, beating by 1.2 points its previous intraday high on December 3.
Capital.com analyst Kyle Rodda said the market was gaining because of the follow-through from Wednesday's lower-than-expected inflation readout, a Federal Reserve rates decision and earnings from a trio of the "magnificent seven" tech giants.
Early Thursday morning the Fed kept interest rates in the US on hold, as widely expected, with chairman Jerome Powell signalling the central bank might leave interest rates where they are for a while given the strength of the economy.
This led Comerica economists to revise their expectations for US rate cuts, forecasting one this year rather than two.
Microsoft and Meta beat earnings expectations, although Tesla's fourth-quarter revenue came in slightly below analysts' predictions.
Closer to home, all of the big four banks predict the Reserve Bank will cut interest rates in February, after NAB on Thursday revised its call after the cooler-than-expected fourth-quarter inflation figures.
"We still expect the cutting phase to be gradual," NAB's economics team wrote.
Overall, Mr Rodda said, there were the same knocks on the market: it’s too expensive, especially given banks are propping things up and they are historically overvalued.
"Nevertheless, the benefit to market multiples from lower yields and bullishness on Wall Street continues to drive money into the Australian equity market," he said.
All of the ASX's 11 sectors finished higher, although industrials and telecommunications marginally.
Energy was the biggest gainer, rising 1.2 per cent as Boss Energy rose 4.7 per cent and Karoon Energy climbed 7.7 per cent after announcing a $US75 million share buyback.
All of the big four banks finished higher, with Westpac climbing 0.7 per cent to $33.78, ANZ adding 0.2 per cent to $30.67 and NAB and Commonwealth Bank both rising 1.0 per cent, to $33.78 and $160.61.
CBA finished just shy of its all-time high in early December.
In the heavyweight mining sector, BHP gained 0.9 per cent to $39.48, Rio Tinto added 0.7 per cent to $117.05 and Fortescue grew 0.3 per cent to $19.14.
There were a handful of financial firms that suffered dramatic drops on company-specific news.
Zip Co plunged 25.4 per cent to a four-month low of $2.44 after the buy now, pay later company reported a drop in second-quarter revenue yields out of Australia and New Zealand and smaller-than-expected cash earnings of $35.3 million.
Credit Corp fell 12.6 per cent to a two-week low of $12.55 after the debt collector reported slightly softer collection trends than expected in the second half.
Magellan Financial retreated 8.3 per cent to a two-week low of $11.38 after the asset manager announced head of investments Gerald Stack would step down after 18 years with the company.
In the technology sector, Appen sunk 4.6 per cent to $2.50 after the AI dataset training company reported it brought in $66.7 million revenue in the fourth quarter, down seven per cent from a year ago.
The Australian dollar was buying 62.21 US cents, from 62.45 US cents at close of business Wednesday.
ON THE ASX:
* The benchmark S&P/ASX200 index on Thursday gained 46.7 points, or 0.55 per cent, to 8,493.7
* The broader All Ordinaries climbed 45.2 points, or 0.52 per cent, at 8,745.9
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 62.21 US cents, from 62.45 at the close of business Wednesday
* 96.12 Japanese yen, from 96.89 yen
* 59.71 euro cents, from 59.81 euro cents
* 49.99 British pence, from 50.14 pence
* 110.19 NZ cents, from 110.22 NZ cents
