The benchmark S&P/ASX200 index on Tuesday finished up 9.0 points, or 0.1 per cent, to 8,677.2, while the broader All Ordinaries gained 15.3 points, or 0.17 per cent, to 8,941.5.
Traders were digesting minutes from the Reserve Bank's July 7-8 meeting, in which the central bank surprised observers by declining to trim interest rates.
ANZ head economist Adam Boynton said the minutes left unchanged the bank's view that the RBA would cut rates in both August and November.
Market participants were also pondering the reason for Monday's 1.0 per cent pullback, which followed a 1.37 per cent rally on Friday that had left the index at its highest level ever.
Monday's heavy sell-off following Friday's record high mirrored a pattern that had occurred about half a dozen times in 2024, IG analyst Tony Sycamore said.
"I'm still struggling to explain what was behind that," he told AAP.
It was possible the pullback was profit-taking before the August earnings season, which was likely to highlight stretched valuations in certain sectors, particularly the banks, Mr Sycamore said.
"There has been noticeable rotation from out of the banks into the big mining stocks, really, since the start of this new financial year," he said.
"And that seems to be gathering a little bit of pace as well."
Investors might also be following the lead of Warren Buffett, who had been liquidating his bank holdings, Mr Sycamore said.
Commonwealth Bank on Tuesday dropped 3.1 per cent to $172.42 in its worst daily performance since a 6.2 per cent drop on April 7.
Australia's biggest bank is still up 12.5 per cent for the year, but has dropped 10.2 per cent since hitting a record high nearly four weeks ago.
The other big retail banks all finished in the red as well, with NAB subtracting 2.7 per cent to $37.22, Westpac falling 1.3 per cent to $32.65 and ANZ retreating 0.8 per cent to $29.82.
The ASX's financial sector as a whole was its worst performing on Tuesday, dropping 1.7 per cent, while the materials/mining sector was the best performing, rising 2.4 per cent.
BHP grew 2.6 per cent to $41.51, Fortescue advanced 3.3 per cent to $17.81 and Rio Tinto added 3.4 per cent t $118.32.
Goldminers also did well as the yellow metal traded for a one-month high of just under $US3,400 an ounce.
Newmont and Evolution both rose 2.8 per cent while West African Resources climbed 8.6 per cent.
Also, WA goldminer Spartan Resources rose 8.4 per cent to $2.13 on its last day of trading on the ASX before it is acquired by peer Ramelius Resources in a $2.4 billion cash and scrip transaction.
Ramelius gained 8.1 per cent to $2.52.
Back in the financial sector, Insignia had soared 12.2 per cent to $4.41 after the company formerly known as IOOF agreed to be acquired by a US-based private equity firm for $3.2 billion.
CC Capital will pay $4.80 a share, a 56.9 per cent premium from Insignia's share price in December when news of its interest first became public, but less than the $5 per share price that CC lobbed in March.
The acquisition includes MLC Wealth, the investments and superannuation business that IOOF bought from NAB in 2021.
The Australian dollar was buying 65.14 US cents, from 65.17 US cents about 5pm on Monday.
ON THE ASX:
* The benchmark S&P/ASX200 index on Tuesday gained 9.0 points, or 0.1 per cent, to 8,677.2
* The broader All Ordinaries climbed 15.3 points, or 0.17 per cent, to 8,941.5.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 65.14 US cents, from 65.17 US cents on Monday.
* 96.25 Japanese yen, from 96.41 Japanese yen
* 55.72 euro cents, from 55.99 euro cents
* 48.35 British pence, from 48.47 British pence
* 109.42 NZ cents, from 109.25 NZ cents
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