The local share market and the Australian dollar have risen significantly as the the Reserve Bank of Australia (RBA) hikes the cash rate for the seventh time in a row.
As most economists anticipated, a 0.25-percentage-point increase was delivered, bringing the RBA's cash rate target to 2.85 per cent.
However, one in four economists predicted the central bank might opt for a larger, 0.5-percentage-point hike, according to Reuters-polled economists, particularly after the latest ABS figures showed inflation rising at its fastest rate in 32 years.
By 4:11pm AEDT, the Australian dollar was trading at 64.25 US cents, after gaining 0.5 per cent.
The ASX 200 closed up 1.7 per cent, to 6,977 points. It was a big improvement, considering the benchmark stock index had briefly fallen into negative territory in morning trade.
Mining, healthcare and utilities stocks were among the best performers, including Imugene (+11.4 per cent), Origin Energy (+4 per cent), and lithium companies Pilbara Minerals (+4.3 per cent), Core Lithium (+4 per cent) and Allkem (+4.1 per cent).
On the flip side, shares of Chorus (-3.6 per cent), Brickworks (-2.3 per cent) and A2 Milk (-1.1 per cent) fell sharply.
Property prices continued to retreat in October, with the nation's median price dropping another 1.2 per cent, to $721,018, the latest CoreLogic data reveals.
Prices fell in every capital city — and nearly every region as well — as the 2.5-percentage-point increase in rates by the RBA since May continued to bite.
Wall St slips ahead of Fed decision
A weak performance on Wall Street appears to be weighing on local investor sentiment.
The Dow Jones, S&P 500 and Nasdaq Composite fell by 0.4, 0.8 and 1 per cent, respectively.
US stocks fell overnight as investors traded cautiously ahead of the Federal Reserve's interest rate decision, which will be announced on Thursday morning (AEDT).
The Fed is widely expected to raise interest rates by 0.75 percentage points, but investors will look for any clues that the US central bank may slow the pace of future rate hikes.
Hopes the Fed may pull back from its aggressive interest rate hike policy have lifted stock markets in recent weeks, with the S&P notching a gain of nearly 9 per cent over the past fortnight.
The Dow recorded its biggest monthly gain since January 1976, after jumping 14.1 per cent in October.
Meanwhile, Apple shares dropped 1.5 per cent after a Reuters report said production of its iPhones could slump by as much as 30 per cent next month due to tightening COVID-19 curbs in China.
European inflation hits record high
Europe's STOXX 600 index rose 0.4 per cent, after the latest inflation data showed consumer prices climbing at a record rate in October.
Consumer price growth in the 19 countries sharing the euro accelerated to 10.7 per cent last month — up from 9.9 per cent a month earlier — heaping pressure on the European Central Bank (ECB) to keep raising interest rates.
The ECB doubled its deposit rate, to 1.5 per cent, last week and promised more tightening in the months to come, even if it pushed the bloc into recession.
Investors will also look towards a Bank of England's policy meeting later in the week, with bets running high of it not budging from its similarly hawkish stance.
By 4:15pm AEDT, spot gold rose 0.3 per cent, to $US1,637 an ounce.
At the same time, Brent crude futures rose 0.8 per cent, to $US93.58 a barrel.
ABC/Reuters
