Australian shares closed higher on Wednesday, led by gains in energy and mining stocks on the back of a rebound in commodity prices, while caution prevailed ahead of a US Federal Reserve policy decision later in the day.

The S&P/ASX 200 index ended 0.14% higher at 6,986.7 after rising 0.5% in early trade.

The US central bank will release its policy statement at 1800 GMT and market participants will closely scrutinise it along with Fed Chair Jerome Powell’s comments for any signal that policymakers are contemplating tempering rate hikes.

“The market has already priced in a 75-bp hike out of the FOMC (Federal Open Market Committee) meeting and investors will only be surprised if the Fed stays ultra-hawkish and rules out the possibility of a softer pace in December,” said Hebe Chen, a market analyst with IG Markets.

Australian miners rose 1.4% as iron ore futures gained after China’s central bank chief expressed hopes for a soft landing in the country’s ailing property market. Mining heavyweights BHP Group, Fortescue Metals Group and Rio Tinto rose between 1.7% and 2.9%.

Rio Tinto advanced after the most vocal opponents to its Turquoise Hill Resources acquisition deal agreed not to vote at a shareholder meeting that will determine whether the $3.3 billion deal goes ahead.

Australian shares close at 7-week high as RBA sticks with slower hikes

Energy stocks rose 1.1% as oil prices gained on sustained demand, with sector major Woodside Energy advancing about 3%, while Santos climbed 2.2%.

Financial stocks closed 0.1% higher, with three of the country’s “big four” banks rising between 0.2% and 0.7%.

Commonwealth Bank was down 0.1% even as the lender said it would hike its loan variable interest rates by 25 bps per annum from the end of next week, in line with the Reserve Bank’s interest rate increase.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index fell 0.3% to 11,282.8.