The Australian sharemarket rose by 1.7 per cent within the first 45 minutes of trade on Wednesday after a lower than expected interest rate hike and a rally on Wall Street.
The Reserve Bank of Australia surprised the market by easing the breakneck pace of cash rate rises when it handed down a 0.25 per cent increase rather than a 0.50 per cent hike after its monthly meeting on Tuesday.
It was the sixth consecutive increase in the cash rate, which is now at a nine-year high of 2.6 per cent and has been lifted by 2.5 percentage points since May.
The benchmark ASX 200 was up by 116.3 points, or 1.74 per cent, to 6815.6 points by about 10.45am on Wednesday.
The broader All Ordinaries was up by 122.4 points, or 1.77 per cent, to 7027.7 points in the same period.
Tech stocks, which are more sensitive to interest rates, led the rally by gaining more than 3.8 per cent.
Tech was followed by financials, real estate, telecommunications, consumer discretionary and health care.
Of the 11 local sectors, only utilities and staples slumped slightly – both by less than 0.3 per cent.
Australian shares were expected to rise after taking a cue from Wall Street, where all three major indices performed strongly overnight on the second day of its own rally.
The S & P 500 climbed 3.1 per cent; the tech-heavy Nasdaq gained 3.1 per cent and the Dow Jones Industrial Average rose 2 per cent.
The smaller than anticipated interest rate hike in Australia, combined with the release of soft economic data in the US, sparked hope the Federal Reserve might also cool off on its aggressive rate rises.
Investors were buoyed by the figures showing the US had experienced its biggest drop in job openings in nearly 2½ years even though labour demand remained strong.
The market took it as a sign the Fed’s interest rate hikes have been working to slow the economy and get a handle on inflation.
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