The local share market has enjoyed its best gains in more than two years after the Reserve Bank slowed its rate hike campaign to assess the economic fallout.

The benchmark S&P/ASX200 index closed up 242.4 points, or 3.75 per cent, to 6699.3 on Tuesday, while the broader All Ordinaries gained 248.9 points, or 3.74 per cent, to 6905.3.

It was the most points the ASX200 has gained since it rose 338 points on March 30, 2020, while in percentage terms it was its best day since a 3.89 per cent rise on June 16, 2020.

The market was up more than two per cent before the RBA’s surprise mid-afternoon decision to raise the cash rate 25 basis points, rather than 50 basis points

IG Markets analyst Hebe Chen said that followed overnight purchasing managing index (PMI) data showing the US economy slowing, which could force the Federal Reserve to hike rates at a slower pace.

Ms Chen cautioned that she didn’t see the day’s impressive gains as sustainable.

“This could be classified as a bear market rally, because fundamentally, nothing’s changed,” she said.

“We still have very high inflation, and everything that’s happening in the economic space will only push central banks to keep hiking.”

There are still fears about the state of the global economy and the RBA will need to raise rates further this year for the cash rate to reach its target of around three per cent, Ms Chen told AAP.

For Tuesday, though, the gains were broad and across the board.

Every sector was up at least 1.9 per cent, with energy, mining, tech, financials and property trusts all up by more than four per cent.

BHP climbed 3.8 per cent to $40.07, Rio Tinto added 3.1 per cent to $95.97 and South32 grew 5.3 per cent to $3.75.

Lithium players racked up some of the biggest gains, with Pilbara soaring 12.3 per cent to an all-time high of $5.11, Allkem climbing 9.9 per cent to $14.49 and Sayona Mining up 13.3 per cent to 25.5c.

Goldminer Northern Star climbed 7.4 per cent to $8.24, Newcrest added 6.3 per cent to $17.71 and Evolution rose 5.0 per cent to $2.11.

In the energy sector, coalminers Whitehaven Coal and New Hope both set all-time highs with gains of around six and a half per cent, to $9.74 and $6.70, respectively.

Woodside was up 4.9 per cent to $33.63 and Santos added 4.2 per cent to $7.47 ahead of Wednesday’s OPEC+ meeting where members of the oil cartel are to discuss a big cut in production.

ANZ led the big banks higher with a 5.0 per cent gain to $23.90.

Westpac climbed 4.0 per cent to $21.43, CBA added 4.6 per cent to $94.79 and NAB was up 4.0 per cent to $29.87. Macquarie rose 4.5 per cent to $158.28.

Wesfarmers added 3.7 per cent to $44.40, warehouse owner Goodman Group climbed 5.7 per cent to $16.74 and alcohol retailer Endeavour Group added 3.9 per cent to $7.16.

The Australian dollar was buying 65.31 US cents, from 64.36 US cents at Monday’s close.

Looking forward, the Reserve Bank of New Zealand will make its own decision on rate hikes on Wednesday.

ON THE ASX:

* The benchmark S&P/ASX200 index on Tuesday gained 242.4 points to 6699.3, a gain of 3.75 per cent

* The broader All Ordinaries rose 248.9 points, or 3.74 per cent, to 6905.3

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 65.31 US cents, from 64.36 US cents at Monday’s close

* 94.52 Japanese yen, from 93.32 yen

* 66.21 Euro cents, from 93.32 Euro cents

* 57.44 British pence, from 57.48 pence

* 113.81 NZ cents, from 114.05 NZ cents

 

Derek Rose
(Australian Associated Press)