Australian shares have marked their biggest intraday jump in two years, tracking a strong performance on Wall Street.
The Reserve Bank has surprised the market with a slower pace of rate hikes, delivering a quarter of a percentage point rise Wednesday afternoon.
It was the first time since the RBA's initial hike in May that rates have risen less than 0.5 of a percentage point.
The ASX 200 closed up 242 points or 3.8 per cent to 6,699.
By 4:16pm AEDT, the Australian dollar was down at 64.77 US cents.
Australian mining stocks jumped as much as 4.7 per cent to hit their highest level since September 21.
Mining heavyweights Rio Tinto and BHP Group gained 3.1 per cent and 3.8 per cent, respectively.
Gold explorers also recorded gains, surging 6.8 per cent to hit their highest in nearly three weeks, benefiting from higher bullion prices.
Newcrest Mining jumped as much as 6.3 per cent, while Northern Star Resources hit levels not seen since mid-August.
Sayona Mining climbed more than 13 per cent after the miner announced plans to fast-track lithium operations in its project in Quebec, Canada.
Financials rallied 4.2 per cent. Shares in the so-called "Big Four" banks rose in the range of 4 per cent to 5 per cent.
Meanwhile, the Australian government said resources and energy export earnings were forecast to jump 7 per cent to a record $450 billion this fiscal year, bolstered by soaring coal and gas prices.
Lottery was the only loser on the benchmark index, shedding 0.2 per cent.
US stocks run higher after sell-off in September
US stocks and oil prices jumped on Monday as investors kicked off the final quarter of the year with a close eye on any potential economic slowdown.
The Dow Jones Industrial Average surged almost 3 per cent. The S&P 500 was up 2.9 per cent, while the Nasdaq Composite added 2.7 per cent.
However, the MSCI world equity index, which tracks shares in 45 nations, was down 0.8 per cent.
Stocks rose after a brutal third quarter of steep declines. New data showing US manufacturing activity grew at its slowest pace in nearly 2.5 years injected some life into stocks on the thought that economic weakness could slow inflation and ensuing efforts by the Federal Reserve to continue hiking interest rates.
"Traders are taking the view that bad news for the economy is good news for the stock market," David Madden, market analyst at Equiti Capital, said.
"High inflation is the reason why the Fed is tightening monetary policy and considering the fall in prices paid, we could be witnessing further signs that we are beyond peak inflation."
Investors will have a raft of new economic data to process this week, culminating in the monthly US jobs report due on Friday.
As with manufacturing, signs of softening in that data could show rate hikes having their intended effect of slowing the economy and inflation, although Fed officials maintain they will not change course until price increases are under control.
"With the job market still looking quite tight and wage growth strong, it will take more than these soft monthly indicators to take the Fed off the inflation-fighting warpath," Bill Adams, chief economist for Comerica Bank, said.
Oil climbs
Crude prices jumped after the Organisation of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said it would consider reducing output.
Dropping supply expectations helped push Brent crude up to $US89.28 a barrel by 4.29pm AEDT.
The region-wide STOXX 600 index reversed earlier session losses to close up 0.7 per cent, as data showed manufacturing activity across the euro zone declined further in September, hurt by a growing cost-of-living crisis and soaring energy bills.
Credit Suisse tumbled nearly 1 per cent, reflecting market concern about the Swiss bank as it finalises a restructuring due to be announced on October 27.
News of the British government's decision to abandon plans for a tax cut helped push down yields on the benchmark US 10-year Treasuries, which were last yielding 3.6406 per cent.
Sterling jumped against the dollar on Monday on Britain's tax cut reversal, reversing a brutal drop and surging nearly 1 per cent in afternoon trading.
The safe-haven dollar also took a broader step back on Monday, with the dollar index, which tracks the greenback versus a basket of six currencies, falling 0.2 per cent.
Dips in Treasury yields and the dollar also helped gold prices climb, with spot gold prices rising 1.9 per cent to $US1,691.30 an ounce.
ABC/Reuters
