The S&P/ASX200 rose 34.8 points by midday, up 0.4 per cent, to 8,639, as the broader All Ordinaries improved by 23.9 points, or 0.27 per cent, to 8,847.4.
NAB economists predicted on Tuesday the Reserve Bank was likely finished with its interest rate hiking cycle and expected its next move would be a cut, although they weren't sure when.
The RBA is widely tipped to keep the cash interest rate on hold at 4.35 per cent at its meeting next week, after April's jobs and inflation figures came in softer than expected.
"Domestic data since the May meeting has softened, and while inflation remains elevated, the cooling in domestic economic conditions supports the case for keeping rates on hold," Ebury economist Anthony Malouf said.
"This in our view will see the RBA keep rates comfortably on hold as it assesses the cumulative impact of its tightening cycle."Â
Rate-sensitive stocks took the lead, with consumer staples, discretionaries and real estate stocks each gaining between 1.4 per cent and two per cent, while financials and utilities advanced more than 0.6 per cent each.
Eight of 11 local sectors were trading higher by lunchtime with only energy, materials and IT stocks in the red.
The slip in oil prices came despite fresh US strikes on Iran overnight after Tehran reportedly downed an Apache helicopter.
Federal government data revealed Australia has 43 days of unleaded fuel stock, more than double the legislated minimum and above pre-conflict levels, while diesel and jet fuel stocks are running at 36 and 30 days, respectively.
Imports of US fuel surged to $873 million in April, almost four times their value over the entirety of 2025, JP Morgan research shows.
"By trade partner, Australian-US trade flows have reported the largest bilateral gearshift," JP Morgan economist Tom Kennedy said.
"Imports from Korea and Malaysia also surged, while products from Singapore, the largest destination in 2025, held steady."
Miners were a mixed bag as gold stocks continued their decline as the precious metal eased to 11-week lows of $US4,186 ($A5,959) an ounce, fading against a strengthening greenback due to an increasingly hawkish outlook for US interest rates.
The basic materials sector was down 0.3 per cent by lunchtime, as mega miners BHP and Rio Tinto offered some limited support as iron ore and copper futures' recent falls lost momentum.
In company news, Chemist Warehouse owner Sigma Healthcare tumbled more than four per cent after confirming it was engaged in preliminary discussions to acquire UK beauty and pharmacy chain, Boots.
Wesfarmers shares jumped 2.6 per cent to $82.06 after the Bunnings owner outlined plans to leverage artificial intelligence to fuel growth at its strategy day.
The Australian dollar is buying 70.27 US cents, down from 70.58 US cents on Tuesday at 5pm.
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