Resurgent performances from miners and banks have lifted the Australian bourse higher, but a monetary policy pivot could pave a bumpy road ahead for investors.
The S&P/ASX200 rose 78.5 points on Tuesday, up 0.89 per cent, to 8,857.1, as the broader All Ordinaries advanced 80.5 points, or 0.89 per cent, to 9,149.3.
The top-200 rose more than 117 points in early trade after a solid lead from Wall Street, before dipping sharply following the Reserve Bank's widely expected cash rate increase to 3.85 per cent.
"It's kind of a stark reminder, too, that the economic backdrop here is not as friendly to investors as perhaps they might wish it to be" Capital.com senior market analyst Kyle Rodda told AAP.
The index crept higher in the last half hour of trading, as RBA governor Michele Bullock flagged future decisions would be data-dependent, noting some of recent drivers in inflation upticks may have been temporary.
A 1.5 per cent boost to basic materials stocks came as precious metals and gold miners stabilised after a sharp sell-off in the previous two sessions.
"We've seen global markets hit by a bit of de-leveraging because of the spillover effects of the precious metal sell off," Mr Rodda said.
"We've rebounded, and things are starting to stabilise a little bit again, but the kind of moves that we saw on Friday and yesterday don't really settle down overnight."
Spot gold rose 3.6 per cent during the session to $US4,825 ($A6,880) an ounce, down from a record $US5,595 an ounce on Thursday.
Denver-headquartered gold producer Newmont was the top-200's third-best performer, up 5.6 per cent despite facing a class action relating to its Cadia goldmine in central west NSW over the alleged contamination more than 2,000 properties.
Elsewhere in the sector, iron ore giants provided support, with BHP and Rio Tinto up more than 1.4 per cent each, while mixed miners, copper producers and battery minerals plays also made gains.
Rare earths stocks rose on tailwinds from across the Pacific after the Trump administration announced plans for critical minerals reserve, easing recent fears the US would walk away from price floors for rare earths projects.
The heavyweight financials sector charged 0.8 per cent higher with help from strong performances from Commonwealth and Westpac shares, with both up more than one per cent, even as CBA flagged a $68 million provision impacting its its first half financial report due on February 11.
Energy stocks rose 0.5 per cent, with oil prices edging lower as India struck a deal with the US, promising to stop buying Russian oil in return for tariff relief.
Coal producers were broadly higher, while uranium stocks were mixed.
In company news, Qantas shares crept 0.3 per cent higher to $10.20, as it flagged a deal to sell its remaining minority stake in Jetstar Japan to transition ownership to a Japanese capital-led ownership structure.
Droneshield outperformed the top-200, bouncing 7.8 per cent from a sharp sell-off at the end of January, while Neuren Pharmaceuticals fell almost 10 per cent to the other end of the table after stumbling on an EU regulatory hurdle.
Shares in debt collection and lending company Credit Corp tanked more than 16 per cent despite posting a flat interim profit, as earnings from its Australian and New Zealand business slipped.
The Australian dollar is buying 70.07 US cents, up from 69.39 US cents and spiking on the back of the RBA decision.
ON THE ASX:
* The S&P/ASX200 gained 78.5 points, or 0.89 per cent, to 8,857.1
* The broader All Ordinaries fell 80.5 points, or 0.89 per cent, to 9,149.3
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 70.07 US cents, from 69.26 US cents at 5pm AEDT on Monday
* 108.91 Japanese yen, from 107.27 Japanese yen
* 59.33 euro cents, from 58.44 euro cents
* 51.17 British pence, from 50.65 British pence
* 116.11 NZ cents, from 115.34 NZ cents
