Australian shares closed higher on Tuesday after a steep sell-off in the previous session, as a commodity rally-led strength in resources stocks outweighed weak sentiment due to global recession worries.

The S&P/ASX 200 index closed 0.4% higher.

The benchmark fell 1.6% on Monday.

Investors worldwide continued to remain on the back foot, after US central bank officials signalled that their priority remained in controlling searing price pressures, shrugging off volatility in global markets.

“The market sentiment cautiously stabilized into the new trading week after the shock wave, but it was far away from all smooth sailing,” Hebe Chen, a market analyst from IG Markets said.

Matt Simpson, a senior market analyst from StoneX, also flagged that the S&P 500 and Nasdaq held above their June lows on Monday, meaning it was likely that the benchmark was also going to hold above its June low on Tuesday.

Miners led the gains, rising about 2.9%, tracking higher iron ore prices in China. Index majors Rio Tinto, Fortescue Metals and BHP Group advanced between 2.1% and 5.1%.

Australia shares end at three-month low as strong dollar hits commodity prices

Similarly, energy stocks firmed 1.7%, with sector leaders Woodside Energy and Santos climbing 1.7% and 1.5%, respectively. The gold index also shone, rising 1.5% on higher bullion prices due to a relatively weaker dollar.

Newcrest Mining and Northern Star Resources gained 1.5% and 1.7%. Separately, Star Entertainment rose 1.1%, after the company said it had developed a remediation plan, after it was found unfit to hold a casino license in Sydney.

However, these gains were countered by losses in the other indexes, such as financials, which fell 0.3%, with three of the “Big Four” banks losing between 0.3% and 0.7%.

In New Zealand, the benchmark S&P/NZX 50 index fell 1.9% to finish the session at 11,214.5 points.