At the close, the benchmark S&P/ASX 200 was 31.8 points higher at 4,172.6, adding 67.2 points, or 1.6 percent, over a week of wild swings.
AMP Capital Investors chief economist Shane Oliver said policy makers around the world were finally starting to kick into action and suggested shares had a good outlook.
"Shares are great value for long-term investors and easy global monetary policy is highly supportive, particularly with another round of US quantitative easing looking likely in the months ahead," he said.
"The relative underperformance of Australian shares against global shares is now likely over as rate cuts are coming into focus as are Australia's relatively strong fundamentals."
The Australian dollar also had a see-sawing week, dropping below parity with the greenback on Tuesday for the first time since March.
It recovered and was trading late Friday at 102.91 US cents, marginally above its closing price on Thursday.
"Expect further volatility with a possible dip below parity in the short-term," Oliver said about the commodities-based Aussie.
"However, the medium-term trend is likely to remain up as the US dollar remains under long-term pressure not helped by its debt woes and QE3."
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