Australian shares rose more than 1% on Thursday, led by a rally in commodity stocks, after US inflation data showed consumer prices subsided in June, raising bets the Federal Reserve may have fewer rate hikes in store ahead.

The S&P/ASX 200 index advanced 1.3% to 7,230.8 points by 0036 GMT, hitting their highest level since July 6.

The US Consumer Price Index (CPI) gained just 0.2% in June, data showed on Wednesday, underscoring expectations the Federal Reserve may let interest rates stand after one more 25-basis-point hike at its July policy meeting.

Meanwhile, Reserve Bank of Australia Governor Philip Lowe said on Wednesday he is confident higher interest rates are working to cool inflation but it is possible they will have to do further hikes.

Major sub-indexes in the benchmark ASX 200 posted strong gains.

Gold stocks led gains surging 5.2%, their biggest intraday jump since March 20, tracking an uptick in gold prices.

Australian shares end higher led by rally in commodity stocks

Shares of Northern Star Resources and Newcrest Mining climbed 4.8% and 4.4%, respectively.

Mining stocks rose 2.0% as iron ore prices extended gains on hopes of more stimulus for China’s property sector. Shares hit its best day since June 14. Sector-majors BHP Ltd and Rio Tinto jumped 1.6% and 2.2%, respectively.

Financial stocks advanced 1.1%, hitting their highest level since July 6.

The so called “big four” banks gained between 0.7% and 1.0%.

Energy stocks jumped 1.1%, hitting their highest level since June 22, as oil prices strengthened. New Zealand’s benchmark S&P/NZX 50 index advanced 0.4% to 11,958.36 points.

The country’s central bank kept cash rate steady at 5.5% on Wednesday, hitting pause as expected and flagging rates would be on hold for some time, with most economists still expecting rate cuts to come in 2024.