Australian shares recovered lost ground from earlier in the session to finish higher on Wednesday, as a slowdown in February inflation growth strengthened the case for the central bank to pause its rate hike cycle next week.
The S&P/ASX 200 index ended 0.2% higher at 7,050.3 points.
The benchmark closed 1% higher on Tuesday.
Traders in Sydney are hoping for a pause by the Reserve Bank of Australia (RBA) in their policy meeting on April 4, as recent data indicates that 10 consecutive rate hikes - a cumulative 350 basis points - since May last year have begun to take effect.
Inflation slowed to an eight-month low in February, while retail sales levelled off after wild swings around the year-end holidays, both indicating that rising borrowing costs are starting to pinch consumers.
"A rate pause next week is a done deal, and the RBA will jump at the chance to pause following a record streak of hikes, political heat and unfavourable headlines towards some of the central bank's members," said Matt Simpson, senior market analyst at City Index.
Among local movers, the heavyweight mining index advanced 1.2%, with iron ore majors Rio Tinto, Fortescue Metals Group, and BHP Group gaining between 0.7% and 2.9%.
Gold stocks rose 1.5%, their highest since Jan 25. Alkane Resources Ltd advanced 5%, while Dreadnought Resources Ltd jumped 6.6%.
Easing banking crisis fears give Australia shares modest lift
Bucking the positive trend, banks slid 0.5% to hit their lowest since early October after brokerage UBS lowered price targets and ratings on lenders like National Australia Bank and Westpac Banking Corp.
NAB and Westpac declined between 0.7% and 2.2%.
New Zealand's benchmark S&P/NZX 50 index fell 0.3% to finish the session at 11,736.75.
Sky Network Television Ltd declined 1.2% after it said it would cut around 170 full-time roles by the end of June as part of a proposed reorganisation.
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