The S&P/ASX200 jumped shortly after the bell and was up 120.6 points, or 1.54 per cent, by noon, while the broader All Ordinaries gained 123.8 points, or 1.54 per cent, to 8137.5.
The rally followed a positive session on Wall Street overnight on the back of better-than-expected US earnings and after US President Donald Trump hinted tariffs on China would come down "substantially" from the current 145 per cent level.
All three US equity indexes jumped more than 2.5 per cent, and futures point to further upside after Mr Trump walked back threats to remove US Federal Reserve chair Jerome Powell if the central bank didn't raise interest rates.
All 11 local sectors were trading higher on Wednesday, with energy stocks surging 3.8 per cent.
Oil prices leapt almost one per cent as the US announced fresh sanctions on Iran and softened its tariff stance on top crude importer China.
A better outlook for Chinese demand also helped lift iron ore miners higher, with BHP up 2.9 per cent and Fortescue (2.8 per cent) and Rio Tinto (2.3 per cent) also posting gains.
Uranium miner Paladin has surged more than 20 per cent after posting record production at its Langer Heinrich mine in Namibia.
As risk-on sentiment returned, investors took profits on safe-haven gold, which rolled over to $US3,353 an ounce after hitting $US3,500 for the first time.
Financials helped the bourse higher, up 1.6 per cent, led by a three per cent NAB rally, while Westpac and ANZ rose more than 1.8 per cent each and CBA fell 0.5 per cent.
Macquarie continued to rally and was up 4.5 per cent to $188.93 after announcing it would offload its North American and European public investments business to focus on the Australian market.
Information technology was the second-best performing sector, up three per cent with help from Wisetech (4.2 per cent) and Xero (1.7 per cent).
Consumer discretionary stocks, health care, real estate and industrials were all ahead more than 2.2 per cent by midday.
Despite the uptick in markets, Australia's bigger economic picture has darkened after the International Monetary Fund cut its growth expectations for the Aussie economy to 1.6 per cent, down from 2.1 per cent in January.
The IMF cut its global growth outlook by 0.8 per cent to 2.4 per cent, citing a reset of the global trade system and major US policy shifts.
The Australian dollar is buying 63.99 US cents, down from 64.36 US cents on Tuesday at 4pm, but has fully recovered its more-than seven per cent dip in the wake of the "Liberation Day" tariff announcement.
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