Closing the week on a high, the benchmark S&P/ASX200 index surged 105.6 points, or 1.34%, finishing at 7,971.1. Similarly, the All Ordinaries index rose by 106.1 points, or 1.31%, to reach 8,189.9. This week's 2.49% rise marks the ASX200’s best weekly performance since mid-December.

Analysts from Capital.com highlighted the market sentiment reversal, largely fueled by the US Census Bureau reporting a 1% increase in American retail sales for July—substantially outpacing economists’ forecasts of a 0.3% rise. This revelation, paired with a drop in new jobless claims, soothed economic growth concerns originating from early August’s job report.

Naeem Aslam, Zaye Capital Markets' Chief Investment Officer, reiterated that recent data recalibrated traders' perspectives, alleviating anxieties about the US potentially sliding into a recession. "It has become evident that the US is probably heading towards a soft landing," Aslam mentioned in a client briefing.

Back on the Australian front, every ASX sector closed in the green, spearheaded by a powerful 2.2% advancement in the energy sector, notably driven by Woodside's 2.4% hike. The mining sector followed suit, recovering from recent standstills courtesy of falling iron ore prices. Key players like Fortescue saw an impressive 3.1% jump, with BHP and Rio Tinto posting gains of 2.0% and 1.6%, respectively.

Banking stocks showed solid growth, with the Commonwealth Bank of Australia (CBA) leading a 2.4% ascent to $138.13. ANZ, NAB, and Westpac also registered notable gains of 1.4%, 1.5%, and 1.2%, respectively, underscoring heightened investor optimism across financial services.

Among individual standout performers, Zip Co emerged as the top gainer within the ASX200, soaring 13.5% to a two-year high of $2.19 following the news of their strategic alliance with fintech giant Stripe in the US market.

In currency markets, the Australian dollar demonstrated some strength, trading at 66.35 US cents compared to 66.21 US cents the previous day. Other currency movements were as follows:

  • 98.86 Japanese yen, up from 97.43 Japanese yen
  • 60.41 euro cents, up from 60.11 euro cents
  • 51.53 British pence, remaining unchanged
  • 110.29 NZ cents, up from 110.24 NZ cents

The local share market’s resurgence this week highlights the interconnectedness of global economic indicators, with the sturdy US retail data providing buoyancy to Australian stocks. Investors will now turn their focus to upcoming US economic releases to gauge the continuity of this positive momentum.