The benchmark S&P/ASX200 index on Monday rose 134.6 points, or 1.67 per cent, to 8,201.6, rebounding from last week's sell-off with its strongest gains since a 1.75 per cent rally on July 31.
The All Ordinaries on Monday rose 136 points, or 1.64 per cent, to 8,452.7.
The festive gains came after new US economic data raised expectations for more rate cuts in 2025, and a weekend deal was cut to avoid an imminent US government shutdown.
US President Joe Biden signed a spending bill on Saturday that will fund the US government through March 14 after a tweetstorm by Elon Musk derailed a longer-term solution that the billionaire had derided.
Also, on Friday the Federal Reserve's preferred measure of inflation - the Personal Consumption Expenditures price index - came in slightly lower than expected, increasing the odds that the US central bank might cut US interest rates multiple times in 2025.
the S&P500 rallied 1.1 per cent in response on Friday, and that enthusiasm carried over into Australian trading on Monday, with every sector of the ASX gaining ground.
The heavyweight financial sector was the biggest gainer, rising 2.4 per cent as all the big four banks finished higher.
CBA rose 2.9 per cent to $154.68, Westpac added 2.0 per cent to $32.29, NAB grew 2.1 per cent to $37.14 and ANZ climbed 2.4 per cent to $28.60.
Insurance companies fared even better, with IAG rising 3.1 per cent and Suncorp growing 3.2 per cent.
News Corp rose 3.3 per cent to $50.66 and Telstra grew 1.0 per cent to $4.02 after the companies agreed to sell Foxtel Group to DAZN at a valuation of $3.4 billion, in return for repaid debt and a stake in the European streaming service.
News Corp chief executive Robert Thomson called the transaction a win for News Corp shareholders, DAZN and sports fans in Australia and around the world.
EML Payments plunged 22.5 per cent to a one-month low of 70c cents after the prepaid payment card company said it was sacking its new managing director and chief executive, Ron Hynes, after six months on the job.
EML's board said it had decided that alternate leadership was required to execute the company's EML2.0 strategy, without giving more details.Â
In the heavyweight mining sector, BHP rose 0.8 per cent to $39.90, Fortescue climbed 1.1 per cent to $18.40 and Rio Tinto added 0.3 per cent to $117.14.
In health care, Pro Medicus rose 2.7 per cent to $255.44 after the health imaging company announced another contract win, this time a $30 million, seven-year deal with a Midwestern US-based medical group.
Polynovo rose 5.6 per cent to a four-day high of $2.06 after the Melbourne-based biotech said sales of its skin repair treatments topped $A10 million in November for the first time ever.
The Australian dollar was buying 62.58 US cents, from 62.25 US cents at Friday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Monday gained 134.6 points, or 1.67 per cent, at 8,201.6
* The broader All Ordinaries rose 136 points, or 1.64 per cent, at 8,452.7
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 62.58 US cents, from 62.25 US cents at Friday's ASX close
* 98.01 Japanese yen, from 97.69 Japanese yen
* 59.94 euro cents, from 60.06 euro cents
* 49.75 British pence, from 49.85 pence
* 110.61 NZ cents, from 110.66 NZ cents
