Australian shares rose on Thursday's close, tracking Wall Street markets, after Fed Chair Jerome Powell eased recession and inflation fears, and hinted at further rate cuts this year.

The S&P/ASX 200 Index rose 1.2% or 90.6 points to close at 7,918.9.

The Fed kept its benchmark rate steady Wednesday, with Chair Powell describing tariff-driven inflation as "transitory," adding that recession risk was "not high," Bloomberg reported.

"The Fed's commentary will feed into dollar weakness going ahead and ease the pressure on capital outflows from Asian markets," said Rajat Agarwal, an Asia strategist at Societe Generale, as quoted in the report.

On the domestic front, Australia's seasonally adjusted unemployment rate stood at 4.1% in February, unchanged from the prior month and in line with the Trading Economics consensus forecast, data from the Australian Bureau of Statistics showed.

While Australia's latest employment numbers "surprised on the downside," they are not significant enough to influence the Reserve Bank's future policy path, ANZ Research said.

In company news, Arafura Rare Earths (ASX:ARU) signed an agreement with Traxys Europe for the supply of neodymium-praseodymium (NdPr) oxide from its Nolans Project in the Northern Territory. Shares of the company rose 3% at market close.

Nanosonics (ASX:NAN) received US Food and Drug Administration (FDA) de novo clearance for its Coris system, designed to reduce infection risk by improving cleaning outcomes for flexible endoscopes. Shares of the company rose 14% at market close and earlier reached a near 2-year high.

Lastly, Bain Capital and GIC divested a combined 9.8% stake in Judo Capital Holdings (ASX:JDO) in a block trade after market close on Wednesday, according to multiple media reports.