The S&P/ASX200 rose 49.1 points on Wednesday, up 0.57 per cent, to 8,653.3, as the broader All Ordinaries gained 32.2 points, or 0.36 per cent, to 8,857.
Interest rate-sensitive sectors such as consumer staples, discretionaries, real estates trusts, utilities and financials helped push the bourse higher for a second session after NAB economists tipped the Reserve Bank was done tightening monetary policy.
"We're seeing those rate hike expectations move more towards the idea that at the very least the RBA is going to be on hold, and I guess if we continue to see weak numbers on the employment and inflationary fronts, then maybe we'll start to open up to the idea that we have potentially seen the top of the (hiking) cycle," IG market analyst Tony Sycamore told AAP.
Conversely, hotter-than-expected US economic data last week has narrowed bets the US Federal Reserve will have to raise borrowing costs, bolstering the greenback, which dragged on metals prices and hammered ASX-listed miners.
"The damage is being done today by the material sector, and we're now down for a fourth day in a row, and we're about to unwind all of those almost 12 per cent gains, which we saw from the May low," Mr Sycamore said.
Gold stocks were under particular pressure as the precious metal notched its lowest daily ASX close since December to trade hands at $US4,209 ($A5,995) an ounce.
BHP was one of the only large cap miners to improve on Wednesday, up a meagre 0.2 per cent to $60.20 as the sector bled lower.
Energy stocks also dipped as Brent crude fell below $US91 a barrel, as investors looked through an escalation of attacks between the US and Iran, after government data showed Australian fuel supplies have risen above pre-conflict levels.
Financials gave the bourse some forward momentum as three of the big four banks advanced, along with major insurers IAG and QBE.
Consumer-facing stocks charged higher on the rosier outlook for local interest rates, with both staples and cyclicals up more than 3.6 per cent.
Wesfarmers led the charge in discretionaries after it surged more than four per cent as the Bunnings owner touted its artificial intelligence-focused growth strategy.
Utilities and real estate stocks also rallied, up 1.8 per cent and 1.3 per cent respectively.
In company news, defence technology company Boresight soared 60 per cent on the drone company's ASX debut.
Chemist Warehouse owner Sigma Healthcare tumbled 5.5 per cent after confirming it was in discussions to buy UK beauty and pharmacy chain, Boots.
Plumbing group Reece shot more than eight per cent higher to $15.46 after Barrenjoey upgraded the stock to 'overweight' with a target price of $16.50 per share.
The Australian dollar is buying 70.1 US cents, down from 70.58 US cents on Tuesday at 5pm AEST.
ON THE ASX:
* The S&P/ASX200 gained 49.1 points, or 0.57 per cent, to 8,68,653.3 04.2Â
* The broader All Ordinaries rose by 32.2 points, or 0.36 per cent, to 8,857
One Australian dollar trades for:
* 70.17 US cents, from 70.58 US cents at 5pm AEST on Tuesday
* 112.53 Japanese yen, from 113.06 Japanese yen
* 60.76 euro cents, from 61.15 euro cents
* 52.43 British pence, from 52.83 British pence
* 120.72 NZ cents, from 120.94 NZ cents
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