Australia's benchmark index followed offshore leads solidly higher on Friday, but it wasn't enough to reverse losses in the earlier part of the week.
The benchmark S&PASX200; soared at the open and held onto its gains to add 0.6 per cent to 5854.1 on Friday, narrowing its weekly loss to 0.6 per cent, while the broader All Ordinaries index shed 0.7 per cent over the week to 5925.9.
Driving the index higher on Friday were the big banks and miners, who together make up the majority of the ASX200's market capitalisation.
Greg McKenna, chief markets strategist at AxiTrader, said markets saw "an outbreak of positivity" after the US Treasury Secretary Steve Mnuchin suggested overnight that tax cuts weren't far off, as well as a poll that shows good odds for a victory by moderate independent Emmanuel Macron in the first stage of the French elections on Sunday.
"Even though I've been highlighting the downtrend and the associated drift in data prints in recent weeks, should the market get the result that traders and investors like out of the French election on the weekend, we could see one heck of a risk on rally in stocks and other assets early next week," Mr McKenna said.
"Traders seem to be alert but not alarmed at the moment."
The miners soared off a 4.2 per cent rise in iron ore prices, adding ot Thursday's 2.2 per cent rise, and were further aided by strong performances acrosss aluminium and copper commodities markets.
Pure-play iron ore miner Fortescue Metals Group leapt 5.2 per cent. Rio Tinto had the biggest impact on the index, up 2.7 per cent, while BHP Billiton rose 1.7 per cent - its only day of gains for the week.
Traders in the big banks took heart from a resumption of the reflation trade.
CBA rose 0.6 per cent, ANZ added 0.9 per cent, Westpac strengthened by 0.5 per cent while NAB was up 1 per cent. Macquarie Group also rose strongly, after being part of a consortium that purchased the UK Green Investment Bank in London.
Outside the heavyweights, there was no shortage of corporate news. with a takeover and a profit downgrade causing the market's most dramatic performances.
A profit warning at Coca-Cola Amatil sent its shares tumbling 10.5 per cent, while government approval of an offshore takeover of energy company DUET Group sent its shares soaring 9.5 per cent to $3.01 - just under the $3.03 per share takeover offer made by Cheung Kong Infrastructure Holdings.
Stock Watch: Coca-Cola Amatil
Investors punished Coca-Cola Amatil on Friday after the company backed away from its promise of mid single-digit earnings growth, saying it now expects underlying net profit to decline in the first half, while full year profits will be flat. The share price tumbled 10.5 per cent to $9.61. Trading in the Australian drinks unit for the year to date has been weaker than last year with all channels experiencing volume and price pressure due to competition and category trends, the beverages giant said on Friday. Chief executive Alison Watkins re-affirmed earnings guidance for mid single-digit earnings per share (EPS) growth in February. But the company said that while that was a longer-term target, full year underlying net profit after tax to be broadly in line with last year.
Iron ore
Australia's largest export managed to claw back some of its losses on Friday, climbing 4.2 per cent to $US68.68 a tonne. But over the week iron ore was down 8.9 per cent thanks to speculative traders betting an onslaught of new high grade supply would wash into the market. Brazilian producer Vale announced on Friday its first-quarter iron ore output fell 6.7 per cent as seasonal rainfall in a fast-growing mine in northern Brazil hampered extraction and the world's No.1 producer.
Transfer pricing
The Australian Taxation Office has won a landmark transfer pricing case against Chevron, which could have ramifications for the $400 billion in loans that multinationals use to finance their activities in Australia. Chevron appealed an earlier Federal Court decision that came down largely in favour of the ATO, which claimed the company owed roughly $340 million in taxes, penalties and interest on a 2003 loan for its North-West Shelf gas project. But a unanimous judgment by the full bench of the Federal Court on Friday reaffirmed the ATO's position. It said the appeal was dismissed, with costs.
Infrastructure takeovers
Shares in DUET Group rocketed 9.5 per cent higher on Friday after the government approved an offshore bid for the company. Shares in fellow utility groups Spark Infrastructure and AusNet also spiked higher and RBC analyst Paul John suggested the DUET deal "may pave the way" for other offshore bids. DUET Group said this morning that the overwhelming majority of its proxy holds - 99.3 per cent - have approved the takeover. Mr Johnson wrote that RBC was "confident of the deal ultimately proceeding", and noted the $3.03 per share offer price was "very much at the high end of M&A; valuations in the sector".
US tax cuts
US markets enjoyed a positive boost following US Treasury secretary Steve Mnuchin's comments around tax reform. The Trump administration is aiming to complete the biggest overhaul of the tax code since President Ronald Reagan by the end of the year, even if a second attempt to repeal the Affordable Care Act fails, he said. Mnuchin's comments eased growing concern that Trump's fiscal agenda is foundering, while the odds for a rates hike in June surged toward toward 60 per cent after Dallas Fed President Robert Kaplan reiterated that three increases this year remain appropriate.