The S&P/ASX200 rose 36.8 points by midday on Friday, up 0.43 per cent, to 8,625, as the broader All Ordinaries gained 39.3 points, or 0.44 per cent, to 8,915.
The top 200 index is on track to shed 81.4 points, or 0.94 per cent, over the week.
The rise followed a modest uptick on Wall Street overnight, after the surprisingly low US inflation figures boosted the outlook for US interest rate cuts in 2026, although the numbers were viewed with suspicion by investors.
"US inflation surprised to the downside, but with reports of data quality issues and a lack of component detail, owing to the government shutdown, reactions in rates markets were underwhelming and market pricing barely budged," Westpac economist Ryan Wells said.
By lunchtime, Australian energy stocks, raw materials and consumer staples were trading lower, as IT stocks, financials, utilities and health care charged higher.
The financials sector supported the broader bourse with a 1.2 per cent rally, buoyed by the big four banks and led by a 1.8 per cent charge from Westpac to $38.92.
Commonwealth Bank shares jumped 1.2 per cent to $156.91, near one-month highs and at the upper end of the tight consolidation that followed mid-November's sell-off.
ANZ shares gained 1.1 per cent to $36.47, despite a federal court judge adding $10 million to the bank's record $240 million fine for broad misconduct previously agreed to with the corporate regulator.
Macquarie Group lifted 1.5 per cent after its Securities subsidiary was slapped with a $35 million fine after admitting to misreporting millions of short sales over multiple years.
Elsewhere, coal producers were broadly higher and uranium stocks rebounded after selling off sharply on Thursday.
Paladin Energy was the top-200's best performer, up 5.9 per cent to $8.81.
A 0.7 per cent slip in materials stocks came as iron ore giant BHP, Rio Tinto and Fortescue all traded lower, despite ore prices trading at the upper end of the range for 2025, as a dispute between BHP and a China-backed ore buyer continues.
Gold producers were broadly lower as the precious metal hovered near record highs, trading hands at $US4,329 ($A6,540) an ounce, supported by slightly higher US rate cut bets, but lacking a clear catalyst to launch it to a fresh record.
Battery minerals edged lower, with lithium stocks consolidating after their recent run-up, while rare earths plays continued to sell off, struggling to find fair value after massive rallies in 2025.
ASX-listed tech stocks outperformed the broader market, rebounding after a strong lead from Wall Street's Nasdaq overnight.
Segment giants Xero and WiseTech were up 2.2 per cent each, as WiseTech co-founder Richard White was cleared of misusing company funds.
Health care stocks surged 0.8 per cent after tumbling to more than two-year lows this week, as 4D Medical rocketed more than 20 per cent higher after a major US medical centre adopted its CT scan technology.
In other company news, shipbuilder Austal won a contract extension for the construction of two additional Evolved Cape-class Patrol Boats for the Australian Border Force.
The Australian dollar was buying 66.21 US cents, up from 66.03 US cents on Thursday at 5pm, with shifting expectations of US interest rate cuts sending the greenback lower against major currencies.
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