The benchmark S&P/ASX200 index closed Wednesday up 64.3 points, or 0.9 per cent, to 7195.3, its highest finish since December 15.
The All Ordinaries gained 69.8 points, or 0.95 per cent, to 7406.4.
"Another strong day on the market today, breaking above the 50-day moving average, a good rebound," said Betashares chief economist David Bassanese.
The gains came even as the Australian Bureau of Statistics reported that monthly consumer prices rose 7.3 per cent in the year to November, up from 6.9 per cent in October and slightly more than economists were expecting.
Inflation equalled a 32-year high set in September, and was seen as reducing the chances that the Reserve Bank would pause its campaign of interest rate hikes.
"I think it just highlights that costs, price pressures are still with us, albeit easing, but easing gradually," Mr Bassanese said, adding he didn't see the RBA changing course in February.
"The bigger picture is our market, still basking in the rebound in the US market following the payrolls on Friday," Mr Bassanese said, referring to a US labour market report showing wage growth moderated in December, perhaps increasing the odds of a dovish pivot by the US Federal Reserve.
China's reopening is also supporting the ASX, he said, particularly the materials sector which was the biggest gainer on Wednesday with a 1.7 per cent rise.
BHP finished up 1.5 per cent to $48.51 in its highest close ever, as iron ore futures climbed above US$120 a tonne for the first time since late June. BHP shares are up 6.3 per cent so far in 2023, after gaining 23.5 per cent in 2022.
Fortescue Metals added 2.4 per cent to an 11-month high of $22.30, while Rio Tinto rose one per cent to $119.42.
Both lithium miners and goldminers also had a strong day, with Allkem lifting 5.1 per cent to $12.47 and Newcrest adding 1.9 per cent to $22.70.
Elsewhere on the market, the consumer discretionary sector rose 1.1 per cent after the ABS announced that retail turnover climbed 1.4 per cent in November to a new record high, with Black Friday sales boosting spending on clothing, footwear, furniture and electronic goods.
JB Hi-Fi gained 2.5 per cent to a six-month high of $46.12, manchester retailer Adairs added 5.3 per cent to a seven-month high of $2.78, and furniture chain Nick Scali climbed 4.0 per cent to a nine-month high of $11.69.
The heavyweight financial sector was quieter, with a mixed day for the big banks.
ANZ climbed 1.2 per cent to $24.01, NAB gained 0.4 per cent to $30.06 and CBA grew 0.2 per cent to $103.53. Westpac was the outlier, dropping 0.5 per cent to $23.30.
Regional Express climbed 5.3 per cent to $1.48 as the airline said its domestic jet operations had been profitable in November for the third month in a row, although its Saab 340 turboprop planes continued to operate at a small loss.
Qantas finished up 0.8 per cent to $6.38, its best level since February 2020 as the ABS inflation figures revealed spending on travel and accommodation surged 4.3 per cent in November - a month where it normally drops following the end of school holidays.
Webjet added 0.9 per cent to $6.47, its highest level since November 2021.
Perpetual gained 0.4 per cent to $24.84 as the NSW Supreme Court approved its acquisition of rival fund manager Pendal, whose shares will be suspended as of Thursday and delisted later this month.
The Australian dollar, meanwhile, was buying 69.18 US cents, from 69.09 cents at Tuesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index closed Wednesday up 64.3 points, or 0.9 per cent, to 7195.3.
* The broader All Ordinaries added 69.8 points, or 0.95 per cent, to 7406.4.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 69.18 US cents, from 69.09 US cents at Tuesday's ASX close
* 91.49 Japanese yen, from 91.17 Japanese yen
* 64.36 Euro cents, from 64.37 Euro cents
* 56.85 British pence, from 56.80 pence
* 108.42 NZ cents, from 108.37 NZ cents.
