The S&P/ASX200 jumped by 90.8 points on Wednesday, up 1.01 per cent, to 9,038.6, as the broader All Ordinaries gained 87.7 points, or 0.96 per cent, to 9,199.7.
The top-200 hit its highest value in 21 weeks after headline inflation slowed to 3.8 per cent in the year to June, while a steady, lower-than-expected core inflation reading of 3.6 per cent was enough for traders to write off an August interest rate hike.
Health care stocks led the charge, up more than four per cent as all 11 local sectors traded higher, with strong moves in consumer-facing stocks, communications, technology and miners.
"The softer (inflation) print firms our view that the cash rate will remain on hold at 4.35 per cent through 2026 and into 2027," said Ebury economist Anthony Malouf.
"Coming a day after (RBA governor Michele) Bullock's relatively dovish remarks, today's data adds weight to the view that the domestic slowdown is broadening faster than the Reserve Bank anticipated, reducing the near-term probability of further hikes even as underlying inflation remains above target."
However, significant risks to energy supply and price growth continued to loom after reports the US intercepted Iranian missiles headed for bases in the Persian Gulf, ending a multi-day pause in fighting.
West Texas crude prices surged almost four per cent to $US82.30 a barrel, lifting Woodside despite the oil and gas giant tightening its production guidance.
Coal miners, along with refinery operators Ampol and Viva also advanced, while uranium stocks lost ground.
Rio Tinto helped lift the materials sector, its shares gaining 3.7 per cent to $165.39 after its first-half profit ballooned by almost 50 per cent to $US6.7 billion ($A9.6 billion).
Gold stocks were mixed but mostly higher after some varied quarterly performance updates, the sub-industry managing a 0.5 per cent improvement as the precious metal hovered near $US4,041 ($A5,811) an ounce.
The heavyweight financials sector ignored the exuberance elsewhere in the market, it rose a relatively sluggish 0.2 per cent as ANZ rallied, while Westpac faded but NAB and CommBank traded flat.
A turbocharged run for health care stocks was led by segment giant CSL, which soared more than seven per cent to 13-week highs as it flagged clinical trials for immunoglobulin manufactured with its next-generation Horizon 2 process.
In company news, Perpetual shares fell two per cent after the investment group knocked back an improved offer from Swedish private equity firm EQT.
The Australian dollar is buying 69.53 US cents, down from 69.71 US cents on Tuesday at 5pm AEST, as the local interest rate outlook continued to soften.
Looking ahead, the US Federal Open Market Committee will take its funding rate decision overnight, with markets tipping a hold, despite US President Trump calling for a cut from new chair Kevin Warsh.
ON THE ASX:
* The S&P/ASX200 rose 90.8 points, or 1.01 per cent, to 9,038.6
* The broader All Ordinaries advanced 87.7 points, or 0.96 per cent, to 9,199.7
One Australian dollar trades for:
* 69.53 US cents, from 69.71 US cents at 5pm AEST on Tuesday
* 113.70 Japanese yen, from 114.12 Japanese yen
* 61.04 euro cents, from 61.32 euro cents
* 52.29 British pence, from 52.42 pence
* 120.12 NZ cents, from 120.80 NZ cents
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