Australia: Shares gain more than 1% on commodity, financial boost

AUSTRALIAN shares rose more than 1 per cent on Tuesday, driven by gains in financial and commodity stocks, even as investors braced for a likely hefty US Federal Reserve rate hike this week.

The S&P/ASX 200 index had gained about 1.2 per cent to 6,796.8 by 0045 GMT, with all sectors except healthcare trading in positive territory. The benchmark fell 0.3 per cent on Monday.

Stock markets across the globe remained on edge amid expectations the Fed would keep its aggressive tightening path until next year to contain stubbornly high inflation.

Markets are pricing in a 75-basis-point hike, with futures showing an 18 per cent chance of a full percentage point increase on Wednesday, according to CME's FedWatch Tool.

In Australia, the resources-rich bourse was led higher by miners despite volatile iron ore prices in China.

The mining index rose as much as 2.2 per cent, with sector leaders Rio Tinto and BHP Group firming 1.5 per cent and 1.7 per cent respectively.

Meanwhile, Fortescue Metals said it would spend about US$6.2 billion to eliminate the use of fossil fuels and achieve "real zero terrestrial emissions" across its iron ore operations by the end of the decade.

The financial sector climbed about 1.4 per cent, with the"big four" banks rising between 1.4 per cent and 2.1 per cent.

Energy stocks firmed 1.4 per cent, as oil prices rose on worries of tight supplies outweighing fears that global demand could slow.

Index heavyweights Woodside Energy and Santos rose 1.1 per cent and 1.3 per cent, respectively.

New Zealand's benchmark S&P/NZX 50 index rose about 0.3 per cent to 11,575.1. REUTERS