The S&P/ASX200 gained 61.3 points on Wednesday, up 0.7 per cent, to 8,785.7, as the broader All Ordinaries improved by 51.2 points, or 0.57 per cent, to 9,017.2.
"Australian shares are staging a relief rally today, with the ASX 200 up around 0.7 per cent after softer-than-expected GDP growth raised hopes that the RBA may have more room to wait before considering any further tightening," Vantage senior market analyst Hebe Chen told AAP.
"The weaker growth number shows the material impact of higher inflation, higher energy prices and elevated rates on the economy, with investors now betting the central bank will be more hesitant before its next move."
Materials, consumer staples and energy stocks did most of the heavy lifting, helping drive the broader market higher.Â
"The rotation suggests investors are favouring sectors with defensive earnings support or commodity leverage, rather than chasing a broad-based risk rally," Ms Chen said.
The energy sector rally came as Brent crude lifted towards $US98 a barrel following reports Iran launched missiles towards Bahrain and Kuwait, which host US military bases.
Elsewhere in the segment, uranium stocks staged a major comeback after US enrichment company Urenco flagged a significant expansion in its enrichment capacity, sending names such as Paladin, Boss Energy and Deep Yellow each more than seven per cent higher.
Basic materials improved by a solid 1.5 per cent as BHP and Rio Tinto, supported by a recent surge in copper.
Goldminers were mixed as the precious metal eased to $US4,460 an ounce.
Financials overcame an early slump to end the session 0.8 per cent higher, while ANZ led the big four banks higher and CommBank shares improved 1.1 per cent to $164.76.
The swing from banks into materials represented one of the biggest sector rotations in decades, Betashares investment strategist Tom Wickenden said.
"Large-cap banks led the ASX to the rally the past few years (but) materials are now having their moment again, which is typical of Australia's cyclical market," he said.
"The lesson each cycle is the same: investors who let market-cap weights carry them into one sector tend to be overweight at the wrong time."
In company news, Ampol shares surged 3.4 per cent higher after the competition watchdog approved its takeover of EG Australia on the proviso it divested 41 petrol stations to another competitor.
Lottery Corporation shares tumbled 1.5 per cent after it booked $10 million in redundancies as it looks to modernise its digital offerings and target a younger demographic.
The Australian dollar is buying 71.59 US cents, down from 71.78 US cents on Tuesday at 5pm AEST.
ON THE ASX:
* The S&P/ASX200 gained 61.3 points, or 0.7 per cent, to 8,785.7
* The broader All Ordinaries improved by 51.2 points, or 0.57 per cent, to 9,017.2
One Australian dollar trades for:
* 71.59 US cents, from 71.78 US cents at 5pm AEST on Tuesday
* 114.54 Japanese yen, from 114.63 Japanese yen
* 61.64 euro cents, from 61.61 euro cents
* 53.23 British pence, from 53.26 British pence
* 121.31 NZ cents, from 120.82 NZ cents
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