The local share market has gained ground after Reserve Bank left interest rates on hold for a second consecutive month while leaving the door open for future hikes.
The benchmark S&P/ASX200 index on Tuesday rose 40.3 points, or 0.54 per cent, to a three-day high of 7,450.7, while the broader All Ordinaries climbed 41.5 points, or 0.54 per cent, to 7,663.7.
In response the Aussie dollar dipped while shares extended their gains.
"The ASX200 loves the result," said eToro market analyst Josh Gilbert.
Economists were divided over whether the RBA was done with its rate hiking cycle after raising rates by 400 basis points in 14 months, the most aggressive series of rate hikes since the 1980s, with some saying the RBA was done and others predicting as many as two more rate hikes.
Betashares chief economist David Bassanese said his base case was that there would be sufficient resiliency in consumer spending in the current months that the Reserve Bank would raise rates one final time in November.
The RBA's quarterly Statement of Monetary Policy to be released on Friday may shed more light on the board's thinking.
Every sector of the ASX finished higher on Tuesday with technology the biggest gainer, rising 1.1 per cent. Xero climbed 1.4 per cent and Altium gained 1.0 per cent.
In the heavyweight mining sector, BHP added 0.8 per cent to $46.37 and Fortescue Metals grew 1.4 per cent to $21.98 but Rio Tinto dipped 0.2 per cent to $116.87.
All of the big retail banks finished higher with ANZ up 0.5 per cent to $25.88, Westpac adding 0.4 per cent to $22.43, NAB gaining 0.6 per cent to $28.58 and CBA rising 0.1 per cent to $105.85.
Credit Corp dropped 12.6 per cent to $20.63 after Australia's biggest debt collector said that domestic supplies of domestic delinquent debts remained constrained, a sign that the tight labour market was letting consumers keep up with payments despite rising interest rates.
Baby Bunting soared 21.3 per cent to $2.02 after the baby goods retailer reported it had made $14.5 million in unaudited full-year profit, down 51 per cent from a year ago but towards the upper end of its June guidance.
Acting CEO Darin Hoekman said while the key promotional month of June had gotten off to a slow start, trading had improved as customers responded more positively to its offers.
The Australian dollar was buying 66.62 US cents, from 66.89 US cents at Monday's ASX close.
ON THE ASX:
* The S&P/ASX200 index finished Tuesday up 40.3 points, or 0.54 per cent, at 7,450.7.
* The All Ordinaries rose 41.5 points, or 0.54 per cent, to 7,663.7.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.47 US cents, from 66.89 US cents at Monday's ASX close
* 94.87 Japanese yen, from 92.50 Japanese yen
* 60.53 Euro cents, from 60.50 Euro cents
* 51.82 British pence, from 51.86 pence
* 107.66 NZ cents, from 108.11 NZ cents.
