Australian shares have more than recouped Monday's losses after Wall Street surged overnight after the UK's reversed course on its mini budget, which had caused chaos in financial markets.
The market rallied with nearly all sectors higher on the ASX 200 index, aside from energy stocks.
The All Ordinaries index rose 1.8 per cent, to 6,976, while the ASX 200 index rose 1.7 per cent, to 6,776.
Leading the way on the benchmark index were industrial firms, real estate, financials, and technology stocks.
Just 12 stocks out of the top 200 companies on the index lost ground.
The best performers were battery materials maker Novonix (+19 per cent), financial technology firm Hub 24 (+14.2 per cent) on a trading update, and Telix Pharmaceuticals (+11.1 per cent).
The worst performers were gold miner St Barbara (-21.3 per cent), cement maker Adbri (-4.5 per cent), which downgraded earnings on Monday, and coal miner Coronado Global Resources (-4.4 per cent).
St Barbara plunged after it cut its production forecast for the year.
Shares in payment terminal firm Tyro Payments (+1.9 per cent) rose after it confirmed it was approached by several parties, including Westpac, over a potential takeover bid.
"Tyro is engaging in preliminary discussions with selected parties in the context of maximising value for all shareholders," the company told the stock exchange.
Atlassion co-founder Mike Cannon-Brookes is Tyro's biggest shareholder.
Meanwhile, Westpac (+2.4 per cent) has opened a fraud prevention centre in Western Sydney to ramp-up efforts to combat scams and fraud.
Oil prices rose in Asian trade, and spot gold held onto its gains.
Media merger
News Corporation (-2.1 per cent) fell as media mogul Rupert Murdoch started a process that could reunite his media assets News Corp and Fox News parent Fox Corp.
Both companies said they have formed a special committee to explore a potential merger.
Mr Murdoch split the media empire in 2013, saying that a new structure would simplify operations.
Fox Corp (-8 per cent) shares also fell on the news in the US.
Rio Tinto production
Miner Rio Tinto said iron ore shipments fell slightly over the third quarter, from a year ago, as demand weakened including from China.
Third-quarter production fell 1 per cent, to 82.9 million tonnes, while quarterly production rose slightly.
The world's biggest iron ore producer said annual shipments were expected to be at the lower end of its 320-335 million tonne range.
"China's economy has been challenged by ongoing COVID-19 lockdowns, power shortages in summer, and continued weakness in the property market," the company said.
"Slowing global demand poses downside risks to China's strong exports, while consumers remain cautious of the property market."
Iron ore prices are on track to end 2022 at their lowest since 2019 as China and Europe cut steel production. Iron ore is used to make steel.
Prices for iron ore fell 1.7 per cent, to $US92.20 a tonne, as hopes of more supportive policy changes from China's Communist Party Congress faded.
Iron ore prices peaked above $US160 a tonne in March.
Rio Tinto also said it is updating an agreement with Wright Prospecting to develop the Rhodes Ridge project in the East Pilbara in Western Australia, one of the world's largest and highest quality undeveloped iron ore projects.
Rio Tinto shares rose 0.1 per cent.
Firms struggle with skills shortages
Australia's company directors say the national skills shortage is their number one concern.
The latest Director Sentiment Index by the Australian Institute of Company Directors (AICD) found that confidence had dropped to its lowest point in two years at minus 8.5, because of concerns about the global and local economies.
Nearly two thirds of directors surveyed said labour shortages were the biggest challenge facing Australian workers, followed by inflation and rising interest rates.
AICD managing director Mark Rigotti said skills shortages and climate change were the major issues that the Federal Government needed to tackle.
"Increasing skilled migration and boosting education and training should be at the heart of our economic response post COVID," he said.
"The lack of skilled labour impacts the ability of organisations to combat current challenges including cyber security, the transition to net zero, and digital transformation."
And while company directors agreed that the Reserve Bank was raising interest rates at the right pace, more than half think it will lead to a significant increase in business insolvencies and a housing debt crisis.
"A narrow majority of directors agree with the RBA's efforts to tame inflation," Mr Rigotti said.
"But there are concerns emerging around the risk of recession and especially the impact on the housing market."
RBA not for turning
However, the Reserve Bank deputy governor Michele Bullock expects the central bank to keep raising interest rates over the coming months, with the pace and timing to be determined by how the economy is tracking.
Earlier this month, the RBA raised official interest rates by 0.25 per cent to 2.6 per cent, instead of the half-a-percentage-point rate rise that was forecast.
Discussing the decision during a speech to a financial conference in Sydney today, Ms Bullock said there was no doubt that a further increase in interest rates was warranted.
She said there was an active discussion, both internally and at the RBA board meeting, about the appropriate size of the increase.
"There has already been a substantial rise in interest rates since May, which — along with price rises — is beginning to put pressure on household budgets," Ms Bullock said.
However, she said, interest rates needed to keep increasing to ensure inflation returned to the RBA's target range of 2-3 per cent.
"Inflation is too high in Australia and is expected to rise further," Ms Bullock said.
The RBA has increased interest rates by 2.5 percentage points from 0.1 per cent in May.
Consumer price rises are running around 7 per cent on an annual basis, and are expected to reach nearly 8 per cent by the end of the year.
ANZ senior economist Adelaide Timbrell said the bank expected household spending to slow down in 2023 as higher interest rates kick in.
"The slowdown has been delayed by the very strong labour market and large savings buffers among households from COVID-related fiscal and monetary stimulus," Ms Timbrell said.
"The increasing cost of household debt and the roll-off of fixed rate mortgages will be key to the slowdown."
The Australian dollar surged 1.5 per cent overnight to above 63 US cents after falling below 62 US cents.
At 4:30pm AEDT, it was higher at around 63.18 US cents.
NZ inflation higher than expected
Consumer inflation in New Zealand rose by more than expected over the September quarter.
Statistics New Zealand said that annual inflation rose to 7.2 per cent over the quarter, easing back from an annual rate of 7.3 per cent over the June quarter.
However, from July to September, prices rose by 2.2 per cent, more than the 1.7 per cent rise from April to June, because of higher costs for home building, local government taxes and rents.
Official interest rates in New Zealand stand at 3.5 per cent.
The NZ50 index climbed 0.6 per cent to 10,847.
The NZ dollar rose more than 1 per cent against the greenback to 57 US cents on expectations of more rate rises by the Reserve Bank of New Zealand.
Wall Street rally
US stocks jumped overnight boosted by banking and tech stocks after the UK Government's u-turn on its economic plans.
Bank of America jumped more than 6 per cent as the lender's net interest income was boosted by rising interest rates over the quarter, even though it bolstered its loan loss reserves as a buffer against the softening US economy.
Elsewhere, Bank of NY Mellon also benefited from higher interest rates.
The news contrasted with a fall in net income over the third quarter for other Wall Street financial giants, including JP Morgan Chase, Morgan Stanley, and Citigroup.
Meanwhile, the Dow Jones Index rose 1.9 per cent, to 30,186, the S&P 500 rose 2.6 per cent, to 3,678, and the Nasdaq Composite rose 3.4 per cent, to 10,676.
US stocks remain in a bear market amid high inflation, the war in Ukraine, supply chain bottlenecks and predictions of recessions in the US and globally.
Brent crude oil was steady as recession fears offset China's continuation of stimulatory monetary policy.
Overnight, Brent crude rose just 0.1 per cent, to $US91.74 a barrel, while West Texas crude slipped 0.1 per cent, to $US85.40 a barrel.
Spot gold gained 0.4 per cent, to $US1648.70 an ounce.
UK policy u-turn
UK shares rose as new finance minister Jeremy Hunt reversed Prime Minister Liz Truss's mini budget that saw debt-funded tax cuts cause turmoil in financial markets and sent the pound to a record low against the US dollar, forcing emergency intervention from the Bank of England.
The FTSE 100 index gained 0.9 per cent, to 6,920.
Under the new policy, most of the 45 billion pounds ($81 billion) worth of tax cuts will go and a two-year energy cost relief scheme for households and businesses will be scaled back from two years to six months.
The pound jumped more than 2 per cent against the greenback on the news and yields on long-dated UK government bonds dropped further.
"Hunt's statement should reduce the need for the BoE [Bank of England] to raise rates as aggressively as it might have done, but it is still struggling to bring inflation down and, as such, will need to act in some shape or form," said Richard Carter, head of fixed interest research at Quilter Cheviot.
"In the short-term, however, this raises serious question marks over the future of the prime minister and, as such, further political volatility lies ahead for markets," he said.
ABC/Reuters
