Australian shares rebounded from seven-week lows on Tuesday after the Reserve Bank of Australia signaled a wait-and-see approach following three interest rate hikes this year.

The benchmark S&P/ASX 200 index rose 1.2% to 8,604.70 points after falling 1.5% on Monday.

“The RBA minutes today offered a modest sign of relief to markets, with policymakers acknowledging that policy is already sitting in restrictive territory after three hikes this year,” said Hebe Chen, market analyst at Vantage Markets.

“Traders interpreted that as a less urgent and less aggressive tone in the near-term… A near-term break now looks increasingly likely, but that doesn’t mean another hike is off the table.”

Minutes from the RBA’s May board meeting suggested the central bank views current monetary policy as sufficiently restrictive, giving it room to observe the effects of the Iran war amid rising inflation and slower growth. Markets are on hold in June and are likely to rise by around 60% in August.

RBA assistant governor Sarah Hunter said fears of higher energy costs could push up consumer prices was one reason the central bank raised interest rates for the third time this year to 4.35% in May, fully reversing the amount of policy easing it had done in 2025.

Financials rose more than 1.7%, the big four banks between 1.3% and 2%.

Industrial stocks gained 1.2% and real estate stocks rose 1.8%.

Meanwhile, the consumer staples sub-index rose 3% to a one-week high, helped by a 3.7% jump in Woolworths after JPMorgan upgraded the stock to “overweight”.

Miners fell 0.2%, tracking weakness in commodity prices. Bellwethers BHP Group and Rio Tinto fell 0.1% and 0.2%.

Energy stocks extended gains for a third straight session, rising 0.5% to a two-week high, defying a slump in oil prices after the US paused planned strikes against Iran to make room for talks.

New Zealand’s benchmark S&P/NZX 50 index rose 1.7% to 12,974.32 points.