A Reserve Bank decision to extend support for a lockdown-ravaged economy has encouraged a rally on the share market.
Investors recovered earlier losses after the Reserve Bank on Tuesday said it would extend its deadline for bond purchases of $4 million per week from November to at least February. The cash rate stays at a record low 0.1 per cent.
The central bank is trying to keep bond yields low and encourage more optimistic investment while the economy slumps.
Fidelity cross-asset investment specialist Anthony Doyle said investors could be happy with the outcome.
Bond purchases were aimed at influencing currency and bond yield, Mr Doyle said, and not rate moves.
However, he noted the bond market had since priced the next rate rise as not being before 2024, in line with the RBA forecast.
Banks and other investors earlier this year claimed a rate rise would happen sooner as the economy rebounded from the coronavirus recession.
Mr Doyle said policy conditions still supported equities.
The benchmark S&P/ASX200 index closed up by 1.8 points, or 0.02 per cent, to 7530.3.
The All Ordinaries closed higher by 2.6 points, or 0.03 per cent, to 7826.4.
The RBA news also caused movements in foreign exchange.
The Aussie dollar rose then fell but all the while traded within the 74 US cents bracket.
Wall Street will soon have its first trading day of the week after markets closed for a public holiday.
Investors are also focusing on a European Central Bank meeting this week as some policymakers call for it to start paring back bond purchases as inflation surges.
On the ASX, the big miners had considerable falls after the iron ore price fell overnight to about $US132 per tonne.
BHP dropped 0.36 per cent to $42.04. Fortescue shed 3.12 per cent to $17.99. Rio Tinto lost 1.8 per cent to $108.70.
Telecommunications was the top performing category. It was closely followed by energy and healthcare.
Meal kit delivery provider Marley Spoon sunk more than 10 per cent after Woolworths sold a $53 million stake.
The supermarket giant had invested in Marley Spoon and its bonds matured this week.
The bonds were converted to a stake of less than 10 per cent which Woolworths sold for $1.91 per share equivalent.
Shares in Woolworths were down 0.47 per cent to $40.54.
In banking, Westpac was the only one of the big four to close higher. Shares were up 0.15 per cent to $26.03. The others lost less than one per cent.
Shares in Aussie Broadband were paused from trading prior to what may be a capital raising.
The company has been trying to expand its fibre network into states other than Victoria.
Shares last traded higher by 7.67 per cent to $4.63.
The Australian dollar was buying 74.28 US cents at 1728 AEST, lower than 74.40 US cents at Monday's close.
ON THE ASX
* The benchmark S&P/ASX200 index closed up by 1.8 points, or 0.02 per cent, to 7530.3 on Tuesday.
* The All Ordinaries closed higher by 2.6 points, or 0.03 per cent, to 7826.4.
* At 1728 AEST, the SPI200 futures index was lower by 12 points, or 0.16 per cent, to 7520 points.
One Australian dollar buys:
* 74.28 US cents, from 74.40 cents on Monday
* 81.66 Japanese yen, from 81.73 yen
* 62.55 Euro cents, from 62.68 cents
* 53.70 British pence, from 53.71 pence
* 104.20 NZ cents, from 104.11 cents.