At the market close the benchmark ASX 200 index was up 56.20 points or 0.83 percent at 6,834.00, while the broader All Ordinaries index was up 56.30 points or 0.80 percent at 7,105.70.
U.S. stocks rebounded after U.S. Fed Chair Jerome Powell assured that interest rates would remain low for some time.
On the local market, nearly all sectors finished higher, led by materials and energy stocks, which were up 1.74 and 1.60 percent respectively.
Iron ore giant BHP surged 3.25 percent to end the day at a record high. Energy firms were boosted by higher oil prices.
Travel stocks also soared on COVID-19 vaccine optimism and plans by national airline Qantas to resume international travel in October.
On the other side, the A2 Milk Company tumbled 16.17 percent after reporting a 35 percent fall in first-half net profit as COVID-19 restrictions impacted its China e-commerce sales.
In the financial space, the big banks rallied with Commonwealth Bank up (1.11 percent), National Australia Bank up (1.00 percent), Westpac Bank up (1.29 percent) and ANZ up (0.53 percent).
Mining stocks were mostly higher with BHP up (3.25 percent), Rio Tinto up (1.92 percent), and Fortescue Metals up (3.11 percent), however, gold miner Newcrest was down (2.45 percent).
The country's oil and gas producers surged with Oil Search up (2.12 percent), Santos up (2.95 percent) and Woodside Petroleum up (2.67 percent).
Australia's largest supermarkets jumped with Coles up (0.19 percent), and Woolworths up (1.47 percent).
Meanwhile telecommunications giant Telstra surged (1.28 percent), the national carrier Qantas soared (1.80 percent) and biomedical firm CSL surged (0.86 percent).
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