Australian shares hit a record high for a second straight session on Tuesday as investors continued to pine for a 0.5% rate cut after the US Federal Reserve policy meeting.

The S&P/ASX 200 rose 0.2% or 19.3 points to close at 8,140.90.

Following media reports of potential "aggressive" policy easing, the market is now expecting a 67% chance that the Federal Open Market Committee will lower interest rates by 0.5%, Reuters reported.

"The case for a 50 [basis points] rate cut this week hinges in part on the idea that rates are well above most estimates of neutral - if officials judge that keeping policy in restrictive territory for too long creates unnecessary risk for the economy then there is no sense in dragging their feet," said Capital Economics' Group Chief Economist Neil Shearing.

"The problem is this is a high bar for a large rate cut, particularly at the start of the easing cycle. If nothing else, it creates the impression that central bankers have made a mistake and fallen behind the curve," Shearing added.

On the domestic front, Australian consumer confidence received a boost with the ANZ-Roy Morgan consumer confidence index reaching an eight-week high, rising 1.8 points to 84.1 in the week ended Sept. 15.

In corporate news, Octava Minerals' (ASX:OCT) shares surged 90% at market close following the discovery of antimony mineralization during a review of drill data at the Yallalong project in Western Australia.

Shares of Pacific Smiles (ASX:PSQ) ended 6% higher following an offer from Genesis Capital-owned Beam Dental to acquire all shares of the dental chain in exchange for either AU$1.90 cash per Pacific Smiles share, one Beam share per one Pacific Smile share, or mixed consideration of AU$0.475 cash and 0.75 of the holding company's shares per Pacific Smiles share.

Asara Resources (ASX:AS1) signed a binding subscription agreement with Barbet to raise $950,000 through a placement of 118.1 million Asara shares at AU$0.012 apiece, representing a 12% stake in the ASX-listed mineral explorer. Its shares jumped 9% at market close.