The benchmark S&P/ASX200 index on Monday finished up 51.1 points, or 0.73 per cent, at 7,124.7 in its highest close since September.
The broader All Ordinaries climbed 51 points, or 0.7 per cent, to 7,336.1.
The rally comes off the back of a 0.46 per cent gain last week and a strong finish from Wall Street on Friday, after dovish comments from Federal Reserve chair Jerome Powell.
The Dow Jones Industrial Average climbed 0.8 per cent while the S&P500 and tech-heavy Nasdaq both closed 0.6 per cent higher to cap the fifth consecutive weekly gain for all three indexes.
After pricing in a US interest rate cut in June or July, the market is now betting on a start to the easing cycle as early as March, Eightcap market analyst Zoran Kresovic said.
"That shift in the messaging that's been pushed into the market is actually starting to build confidence in risk-on sentiment, especially in equities, that we will potentially get another run coming into the month of December, which is generally considered a super bullish month," he told AAP.
Nine of the 11 official ASX sectors finished higher, with only energy and utilities stocks in the red.
Origin dropped 3.9 per cent to $7.86 after shareholders sank a long-running takeover bid by a Brookfield-led private equity consortium.
About 69 per cent of shareholders voted in favour of the proposal, short of the 75 per cent threshold required for the $9.39 per share deal to go ahead.
The energy retailer, as well as sluggish oil prices, weighed heavily on the sector, Mr Kresovic said.
Oil and gas producers Woodside and Santos dropped 1.6 per cent and 1.2 per cent respectively as the Brent Crude benchmark hovers around a key support of $78 per barrel.
The heavyweight miners drove the index higher in lock-step with the iron ore price, with BHP up 1.7 per cent, Rio Tinto climbing 1.6 per cent and Fortescue gaining 0.4 per cent.
Goldminers Northern Star and Evolution were among the index's best performers, up 3.7 and 2.4 per cent respectively, as falling bond yields sent the price of gold to a record high.
The Big Four banks made solid gains. CBA rose 0.9 per cent, ANZ firmed 0.1 per cent, NAB gained 0.8 per cent and Westpac finished 0.6 per cent higher.
IGA owner Metcash climbed 1.1 per cent to $3.59 after unveiling a 12.2 per cent profit boost for the first half of the financial year, helped by a 5.7 per cent increase in food sales despite economic headwinds.
"Foot traffic into stores increased, but items per basket decreased, reflecting cost of living pressures on household grocery budgets," Metcash chief executive Doug Jones said.
All eyes this week will be on Wednesday's third quarter GDP data release, with no surprises expected from the Reserve Bank's last board meeting of the year, IG market analyst Tony Sycamore said.
"Last week's cooler-than-expected monthly CPI indicator should see the RBA keep rates on hold in December," he said, with the market pricing in a near-zero chance of a rate rise on Tuesday.
Further afield, the release of US non-farm payroll data on Friday will give investors a further indication of whether wages in the world's largest economy are slowing or continuing to accelerate, Mr Kresovic said.
The Australian dollar is nearing a four-month high against its US counterpart, buying 66.56 US cents, up from 66.12 US cents at Friday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Monday up 51.1 points, or 0.73 per cent, at 7,124.7.
* The broader All Ordinaries climbed 51 points, or 0.7 per cent, to 7,336.1.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.56 US cents, from 66.12 US cents at Friday's ASX close
* 97.72 Japanese yen, from 97.90 Japanese yen
* 61.22 Euro cents, from 60.61 Euro cents
* 52.52 British pence, from 52.30 pence
* 107.44 NZ cents, from 107.27 NZ cents.
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