After spiking more than 80 points in early trade, the S&P/ASX200 closed 12.6 points higher on Thursday, up 0.15 per cent, to 8,592.
The broader All Ordinaries gained 9.3 points by the close, up 0.1 per cent, to 8,877.5.
An early rally sparked by cheaper US borrowing costs faded by the afternoon after an earnings miss from tech giant Oracle dragged on Nasdaq futures, draining the morning's optimism.
"Given now there's talk of a potential interest rate hike in Australia, investors will surely be positioning their portfolios and selling out of stocks that might suffer from rate increases here, rotating into sectors and stocks that likely benefit from this new macro shift," Moomoo market strategist Jessica Amir told AAP.
The backdrop would likely provide room to run for US companies, ASX-listed US-facing stocks, small caps, along with gold and silver in 2026, Ms Amir said.
"So it's probably not going to be a very good 12 months ahead for the Aussie share market, so that's why investors will be chasing outperformance," she said.
Raw materials charged 0.9 per cent higher, leading five of 11 sectors into the green, which also included decent performances from energy stocks, and real state trusts.
Gold stocks were broadly positive as the precious metal spiked early in the session before easing to $US4,212 ($A6,346) an ounce, while copper miners also caught a bid.
Evolution Mining and Newmont each lifted more than 0.8 per cent, while Northern Star faded 1.5 per cent and VanEck's gold miners ETF edged 0.6 per cent higher.
BHP, and Rio Tinto each jumped 1.3 per cent or more after weak economic data from China stokes hopes of future stimulus measures from Beijing.
Battery minerals were broadly weaker, with lithium miners running into profit taking after recent strength, while rare earths continued to fade from 2025's wild ride to record valuations.
Financials carved out a 0.3 per cent, as a 0.7 per cent slip in CBA shares to $152.74 counterbalanced a decent day for its big four competitors.
Westpac was the best of the bunch, up 1.3 per cent $38.26 as its leadership defended the bank's environmental record at its annual meeting.
Australia's tech sector dived as futures for its US counterpart pointed lower, tumbling 1.5 per cent by the close.
Healthcare stocks were also hammered, losing 1.1 per cent as CSL, Pro Medicus and ResMed each slipped between 1.6 per cent and 2.3 per cent.
Segment giant WiseTech fell 2.2 per cent, and Life360 gave up a similar amount, with the tracking app struggling to find dip buyers since plummeting more than 37 per cent from October's record highs.
Droneshield was the worst performer of the top 200, slipping more than six per cent after soaring 18 per cent in the previous two sessions.
Building materials manufacturer James Hardie outperformed the market, rising more than seven per cent.
However, its shares are worth just more than half as much as they were a year ago, in what has been disastrous 2025 for the company and a string of captains calls that sparked a shareholder exodus.
The Australian dollar is buying 66.35 US cents, down from 66.42 US cents on Wednesday afternoon after spiking to four-month highs overnight.
ON THE ASX:
* The S&P/ASX200 rose 12.6 points, or 0.15 per cent, to 8,592
* The broader All Ordinaries gained 9.3 points, or 0.1 per cent, to 8,877.5
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 66.35 US cents, from 66.42 US cents at 5pm on Wednesday
* 103.54 Japanese yen, from 104.10 Japanese yen
* 56.76 euro cents, from 57.12 euro cents
* 49.64 British pence, from 49.91 British pence
* 114.49 NZ cents, from 114.99 NZ cents
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