The S&P/ASX200 gained 80 points on Wednesday, up 0.92 per cent, to 8,798.3, as the broader All Ordinaries improved by 82.6 points, or 0.93 per cent, to 8,969.2.
"The ASX turned a shaky morning start into a solid rebound, as softer inflation data gave investors much-needed breathing room on the interest rate trajectory following yesterday's RBA hawkish hike," Vantage senior market analyst Hebe Chen told AAP.
Interest rate-sensitive sectors like consumer retail and real estate - recently under pressure due to high borrowing costs and weak market sentiment - rebounded more than 2.6 and 3.6 per cent respectively, leading the other nine sectors higher.
However, while the relief rally indicated the imminent pressure had eased, the underlying risks around oil prices and bond yields remained, Ms Chen said.
"While crude prices have cooled and front-end yields have retreated, long-end bond yields remain stubbornly elevated - a clear signal that the broader 'higher-for-longer' (interest rate) baseline is still firmly intact," she said.
The late rally couldn't salvage what has been a historically cruel month for Aussie stocks, with the ASX200 down more than three per cent in September - its first negative calendar month since March.
Still, the energy sector advanced 1.6 per cent on Wednesday, with strong performances from coal miners and Viva energy.
Crude prices inched higher over the session with no sign of progress on winding down the Middle East war and related energy crisis, after falling overnight as Saudi oil flows began to recover from recent attacks.
The raw materials sector gained 0.7 per cent, with Rio Tinto outperforming the mega-miners with a 1.6 per cent lift to $166.93, while BHP inched higher to $60.82.
Gold stocks were mixed, with larger cap producers broadly outperforming minnows as the yellow metal held its ground at around $US4,180 ($A5,994) an ounce.
Northern Star was an outlier, up more than six per cent on reports South Africa's Gold Fields Ltd was looking to improve its takeover offer for the miner.
Communications stocks also rallied, up almost two per cent, as realestate.com.au owner REA Group climbed in sync with real estate trusts, while Seek also charged almost four per cent higher.
The heavyweight financials sector rose a relatively unremarkable 0.3 per cent, with CommBank up 0.5 per cent to $151.01, the best performer of the big four banks as it flagged a 0.25 per cent variable home loan interest rate hike, in line with Tuesday's RBA decision, effective October 9.
In company news, Lendlease shares jumped by more than a tenth after satisfying the conditions required to divest its remaining stake in Keyton Retirement Living Trust to Aware Super.
Boss Energy swung a similar amount in the same direction as Peter Botten, former Oil Search managing director, commenced as the uranium producer's chair.
The Australian dollar is buying 69.71 US cents, down from 69.93 US cents on Tuesday at 5pm.
ON THE ASX:
* The S&P/ASX200 rose 80 points, or 0.92 per cent, to 8,789.3.
* The broader All Ordinaries gained 82.6 points, or 0.93 per cent, to 8,969.2.
One Australian dollar trades for:
* 69.71 US cents, from 69.93 US cents at 5pm AEST on Tuesday
* 109.35 Japanese yen, from 110.12 Japanese yen
* 61.42 euro cents, from 61.55 euro cents
* 52.60 British pence, from 52.81 pence
* 123.36 NZ cents, from 123.69 NZ cents
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