The S&P/ASX200 rose 43.5 points on Friday, up 0.5 per cent to 8,806, as the broader All Ordinaries advanced 42.4 points, or 0.47 per cent, to 9,003.7.
The exchange's muted advance was outshone by major rallies in other indices in Asia, the US and Europe, as investor excitement about chip and AI firms outweighed worries about renewed conflict in the Persian Gulf.
"There's a general strong sentiment despite the deterioration of the situation in the Middle East and that's an indicator of real underlying strength globally, yet we just didn't see that here today," Moomoo market strategist Michael McCarthy told AAP.
"It's either either AI-on or AI-off, and Australia's low presence in the industries that this impacts means that we're just not seeing much of an impact here."
Local mining stocks rebounded after tumbling more than four per cent during the week, the bounce led by BHP, Rio Tinto and gold stocks on the back of stronger commodity prices.
Gold is trading hands at $US4,118 ($A5,924) an ounce, but the All Ordinaries gold sub-index was down more than five per cent for the week.
Energy stocks were soft, down 0.2 per cent as oil prices retreated on investor bets the worst of the US-Iran conflict was behind them, despite escalating conflict in recent days.
Woodside and Santos both traded lower, while uranium stocks provided the sectoral support on the back of a reinvigorated AI narrative and signs Australia will boost its exports to India.
Financials helped lift the exchange with a 0.6 per cent improvement, notching its best daily close in nine weeks as the big four banks continued to recover from a weak second quarter.
Health care stocks, consumer discretionaries and communications underperformed.
In company news, Telstra resumed its slump after Wednesday's major outage, with an apology from chief executive Vicki Brady not enough to allay investor concerns about potential fines and reimbursements.
The Finance Sector Union has accused CommBank of using "fake" redundancies to offshore Australian jobs, claiming CBA readvertised axed roles under similar job titles at its Indian subsidiary.
WiseTech Global fell 1.8 per cent as it moved to dispel rumours it was set to lose a major client, days after surging on news co-founder Richard White was stepping down from his lead board role.
Mesoblast shares soared more than six per cent after declaring revenues of $US115 million ($A165 million) in the 2026 financial year for its mesenchymal stromal cell product Ryoncil.
The Australian dollar is buying 69.50 US cents, up from 69.39 US cents on Thursday as the greenback softened on improving risk sentiment.
ON THE ASX:
* The S&P/ASX200 rose 43.5 points, or 0.5 per cent, to 8,806
* The broader All Ordinaries gained 42.4 points, or 0.47 per cent, to 9,003.7
One Australian dollar trades for:
* 69.50 US cents, from 69.39 US cents at 5pm AEST on Thursday
* 112.29 Japanese yen, from 112.63 Japanese yen
* 60.74 euro cents, from 60.65 euro cents
* 51.76 British pence, from 51.69 pence
* 120.39 NZ cents, from 121.11 NZ cents
