The local share market has finished higher for a third day, with nearly every sector gaining ground ahead of Wednesday's crucial US inflation readout.
The benchmark S&P/ASX200 index finished Tuesday up 36.3 points, or 0.5 per cent, to a 13-week high of 7,239.8, while the broader All Ordinaries added 36.2 points, or 0.49 per cent, to 7,446.4.
IG market analyst Tony Sycamore said that while he had maintained a bullish stance in recent months, he was still slightly surprised at the carefree way that equity markets were approaching two big economic events this week that had the potential to reshape the narrative into the new year.
Overnight the US Labor Department is set to announce consumer price index data for November, with annual headline inflation tipped to tick lower to 3.1 per cent, from 3.2 per cent in October.
The Federal Reserve is also widely expected to keep US interest rates on hold at the conclusion of its two-day meeting early on Thursday, Australia time, but the US central bank will also issue closely watched economic projections.
A hotter-than-expected inflation print or a more-hawkish-than-forecast Fed meeting will force a hasty revision to market projections of 100 basis points of interest rate cuts next year, Mr Sycamore said.
Closer to home, NAB reported through its Monthly Business Survey on Tuesday that the economic outlook and activity softened in November but capacity utilisation remained high.
"Outside of the pandemic period, business confidence is now its weakest since 2012, when conditions were significantly weaker and growth in advanced economies were slowing," said NAB chief economist Alan Oster.
But trading conditions still remain above average, reflecting how strong they were to begin with, he added.
Meanwhile the Westpac-Melbourne Institute Index of Consumer Sentiment rose slightly in December as the Reserve Bank left interest rates on hold.
"The gloom that deepened last month has lifted slightly heading into year-end, but consumers remain far from upbeat," said Westpac senior economist Matthew Hassan.
Every sector of the ASX rose on Tuesday except for mining, which was flat. Tech was the biggest gainer, lifting 1.3 per cent as Xero added 3.8 per cent and Audinate Group climbed 4.0 per cent.
Three of the four big retail banks were higher, with CBA rising 0.4 per cent to a 10-month high of $107.41 and NAB and ANZ both climbing 0.8 per cent, to $29.52 and $24.80, respectively. Westpac was the outlier, flat at $21.94.
In the heavyweight mining sector, Fortescue had gained 1.6 per cent to $26.36, while BHP was basically flat at $47.56 and Rio Tinto had dipped 0.3 per cent to $128.53.
Lithium miners resumed their slide, with Liontown down 4.1 per cent, Allkem dropping 1.3 per cent and Pilbara retreating 2.8 per cent.
Retailers Myer, Adairs and Temple & Webster all had a good day, gaining 2.6, 3.3 and 4.2 per cent, respectively.
JB Hi-Fi climbed 0.6 per cent to an 18-month high of $49.62 and Woolworths added 1.8 per cent to a seven -week high of $36.71
The Australian dollar was buying 65.94 US cents, from 65.56 US cents at Monday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Tuesday up 36.3 points, or 0.5 per cent, at 7,235.3.
* The broader All Ordinaries gained 36.2 points, or 0.49 per cent, to 7,446.4.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 65.94 US cents, from 65.56 US cents at Monday's ASX close
* 95.89 Japanese yen, from 95.44 Japanese yen
* 61.23 Euro cents, from 60.91 Euro cents
* 52.44 British pence, from 52.28 pence
* 107.13 NZ cents, from 107.29 NZ cents.
