The 18-year-old, who became the youngest Order of Merit winner in LET history last year, recovered from an opening bogey to fire a three-under 70 along with her English compatriot Holly Clyburn.
Hull’s fellow teenagers Su-Hyun Oh and Eun Woo Choi were the only two players to break 70 over a tricky RACV Royal Pines layout, while defending champion Cheyenne Woods is four off the pace after a battling 73.
Hull overcame her uncertain start and collected birdies at the third, sixth and ninth before giving one back at 11, but she picked up further shots at the par-five 12th and 18th holes to join Clyburn and Katherine Kirk in the clubhouse on three under.
Clyburn had looked set to finish the day with the outright lead after she reached five under after a flawless first 13 holes, but two late bogeys saw her slip into a share of third while Kirk went in the opposite direction when she birdied her final two holes.
Oh staged the most impressive comeback of the day having dropped to two over par after dropping her fourth shot of the round at the first – her 10th.
The young Australian amateur carded four birdies in five holes from the third and then followed two solid shots to the par-five ninth with a superb 30-foot putt for eagle.
“I got off to a really slow start, I was one over after nine and then it all kind of unfolded at the end,” she said. “I’m happy with the finish. I think this is my fourth time to the Australian Masters and I???m feeling pretty good. I feel quite confident to be here and this is kind of where I want to belong if I turn pro.???
But South Korean Choi’s finish was in contrast to Oh’s, finishing with back-to-back bogeys at eight and nine after earlier lifting herself to the top of the leaderboard with three straight birdies from the third.
Kirk provided one of the stories of the day, making four birdies and just one bogey despite having to play with borrowed equipment and clothing after her luggage was delayed in transit.
“I think I just had a good day and got lucky I guess,” said the Queenslander. “I guessed a few clubs right – very unexpected but I???ll take it. I have been told my clubs have arrived, so I’ll go out and hit a few and try to get reacquainted with them and the feel.”
Norway’s Caroline Martens offset five birdies with two bogeys to join the group at three under late in the day, while England’s Florentyna Parker is a further shot behind after a creditable 70.
Three-time champion Dame Laura Davies got to one under after a solid two-birdie back nine, but she struggled on the front half and bogeyed two of her last five holes to hand in a 74.