Australian shares lifted for a second straight day, as investors cautiously await the Reserve Bank's next interest rate hike.

Despite a slight fall in morning trade, the ASX 200 managed to recover from its losses relatively quickly.

The benchmark index gained 0.2 per cent, to 6,626 points, by 12:45pm AEST.

Some of today's best performing stocks were gold miners Regis Resources (+10.7pc) and St Barbara (+6.1pc), oil and gas companies Woodside Energy (+4.3pc) and Paladin Energy (+3.9pc).

The local tech sector also jumped, driven by Pointsbet (+4.1pc), Life360 (+3.8pc) and Zip Co (+3.6pc)

On the flip side, Unibail Rodamco Westfield (-4pc), Lifestyle Communities (-2.5pc), Stockland (-2.3pc) and Brickworks (-2.2pc) suffered heavy losses.

Double rate hike expected

Practically every bank and economist is anticipating the RBA will lift rates this afternoon, as it desperately tries to ease Australia's cost of living pressures.

The nation's headline inflation rate jumped to 5.1 per cent in the March quarter (its highest level in 21 years), and is expected to surge to 7 per cent by December.

According to market pricing, the most likely outcome today is a double-sized rate hike of 0.5 percentage points — which would take the RBA's cash rate target to 1.35 per cent.

The Australian dollar was buying 68.8 US cents, after it rose by a moderate 0.8 per cent overnight. However, the local currency is still trading near its two-year low.

"The RBA is expected to raise the cash rate by 50 basis points (0.5 percentage points) which is nearly fully priced by markets," Commonwealth Bank currency strategist Carol Kong said.

"As a result, the Australian dollar could lift modestly if the RBA lifts the cash rate by 50 basis points as we expect."

Spot gold was trading at $US1,810 an ounce. It was a significant improvement on last week, when the precious metal hit a six-month low ($US1,784).

'Extremely compelling upside'

Overseas, Wall Street was closed for a public holiday on Monday (local time).

A jump in oil prices led to a surge across European energy stocks. That boosted the Stoxx 600 and Britain's FTSE indexes by 0.5 and 0.9 per cent, respectively.

Brent crude futures lifted by 2 per cent to $US113.83 a barrel.

"Some markets are starting to find their footing but there's a lot of volatility right now," Sebastien Galy, senior macro strategist at Nordea Asset Management, said.

However, asset manager Nuveen sees room for optimism after sharp market falls in the first half.

"Beaten-down public markets offer extremely compelling upside potential in the near term," the firm's Global Investment Committee wrote in its mid-year 2022 outlook.

ABC/Reuters