The benchmark S&P/ASX200 index fell 11.8 points by midday on Friday, to be down 0.13 per cent to 9,008.3, as the broader All Ordinaries lost 2.3 points, or 0.03 per cent, to 9,196.
The top-200 eased from an early 56-point lead following another positive session for global equities, after US Federal Reserve governor Christopher Waller flagged a data-dependent approach to US interest rates, taking the sting out of recent hawkish comments from chair Kevin Warsh.
"Bond yields moved lower on both sides of the Pacific as comments from Fed Governor Waller and RBA chief economist (Sarah) Hunter prompted markets to scale back expectations for further policy tightening," Westpac economist Luka Belobrajdic said.
"Oil extended its rally amid ongoing tensions between the US and Iran, while softer Fed tightening expectations supported gains in gold, and a surge in dry bulk shipping rates lifted iron ore."
Brent crude is trading at six-week highs near $US96 a barrel, rising after US Vice President JD Vance refused to put a deadline on the Persian Gulf conflict.
Local energy stocks fell 0.4 per cent, led by refinery operators Ampol and Viva Energy after they went ex-dividend, while Woodside fell for a second session after locking in its shareholder payouts.
The raw materials sector weighed on the bourse as BHP continued its retreat from last week's record high of $68.77 a share.
Gold stocks provided a ballast as the precious metal firmed to $US4,476 ($A6,205) an ounce, while Ora Banda beat out the top-200 with a six per cent rally.
The heavyweight financials sector traded roughly flat, tracking with mixed performances from the big four banks and weaker major insurers.
Discretionary retail stocks rebounded 0.7 per cent as dip-buyers looked for bargains, with the sector still down almost 12 per cent since early August as the gloomy spending outlook and a number of earnings misses weighed.
Investors also dipped their toes in Corporate Travel shares, which gained just over four per cent after Thursday's massive 85.5 per cent plunge following an extended trading halt.
Looking ahead, higher interest rate expectations would continue to pressure Australia's share market, after recent economic growth, inflation and consumer spending figures all came in hotter than expected, Pitcher Partners chief investment officer Cameron Curko said.
Making matters worse, lacklustre productivity growth was adding to Reserve Bank fears that further growth would spark higher inflation.Â
"The revision in market expectations weighed on consumer discretionary names as well as the domestic technology sector given the latter's longer-dated cashflows," Mr Curko said.
The Australian dollar was buying 72.12 US cents, up from 71.65 US cents on Thursday at 5pm and hitting more than three-month highs as Australian and US interest rate expectations diverged.
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