The S&P/ASX200 handed back some early gains but finished 46.2 points, or 0.56 per cent, higher, at 8,343.7.
The broader All Ordinaries rose 50.1 points, or 0.59 per cent, to 8,579.9.
The top 200 is within three per cent of its all-time peak after local shares rallied on this week's US-China tariff de-escalation and a likely Reserve Bank interest rate cut on Tuesday.
"Policy makers have done an excellent job - they've managed to hold on to the gains in the labour market while bringing inflation back into the target band," IG markets analyst Tony Sycamore told AAP.
"So a good week of news there, and the ASX 200 reflected that."
Seven of 11 local sectors traded higher on Friday, with interest rate-sensitive real estate stocks charging 2.3 per cent into the green.
Despite sluggish commodity prices, materials rallied 1.3 per cent, thanks to GDP upgrades for both the US and lead iron ore importer China.
The sector is up 2.4 per cent for the week, while BHP, Rio Tinto and Fortescue have jumped more than five per cent each since Monday.
"The worst-case scenario for China - and by definition, for our resource stocks and for the Australian economy - have been priced out significantly this week," Mr Sycamore said.
Goldminers were among the top 200's best performers, with the precious metal trading at $US3,225 ($A5,018), staging a small rebound on Friday in what will likely be its worst week in six months.
The US-China tariff deal has softened demand for the safe haven, which is down almost four per cent this week.
Financials, which account for roughly half the local share market, finished the week 1.4 per cent higher, despite an almost flat session on Friday.
The Commonwealth Bank pipped a new intraday record of $172.92, but ran into heavy selling to trade back below $170 by the close.
The energy sector eased 0.2 per cent on Friday but was up 5.9 per cent for the week, despite oil prices slipping since Wednesday.
Brent crude is trading just above $US64 a barrel, fading in the second half of the week on rising prospects of increased supply if Iran strikes a nuclear deal with the US.
While interest rate markets have fully priced a 0.25 per cent interest rate cut on Tuesday, the RBA will be keeping an eye on services inflation, strengthening GDP and persistent jobs growth, AMP deputy chief economist Diana Mousina said.
"At the end of the day, we expect the central bank to see more downside risks to the economy from not cutting rates than upside inflation risks from reducing interest rates," she said.
"We expect another 0.25 per cent rate cut in August and potentially another in November."
The Australian dollar is buying 64.27 US cents, down from 64.39 on Thursday afternoon.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Friday 46.2 points higher, up 0.56 per cent to 8,343.7
* The broader All Ordinaries gained 50.1 points, or 0.59 per cent, to 8,579.9
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 64.27 US cents, from 64.39 US cents on Thursday at 5pm
* 93.21 Japanese yen, from 93.78 Japanese yen
* 57.30 Euro cents, from 57.38 Euro cents
* 48.21 British pence, from 48.42 pence
* 108.75 NZ cents, from 109.01 NZ cents
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