The benchmark S&P/ASX 200 index ended up 7 points, or 0.1 per cent, at 6077. The All Ordinaries index rose 10 points, or 0.2 per cent, to 6187, while the Australian dollar jumped to US79.48?? after hitting a four-month high in the session.

US shares touched fresh record highs on Friday night in pre-holiday trading as retail sales sparked optimism in the economy and JPMorgan Chase signalled tax cuts will bolster profits. US markets were closed on Monday night for a public holiday.

"Risk assets are booming, suggesting investor optimism on the economic outlook and creating growth-friendly financial conditions," said Ethan Harris, global economist at Bank of America Merrill Lynch.

Some of the best performers in the Australian share market on Monday were the gold extractors, with Evolution Mining up 6.6 per cent at $2.73, Resolute Mining higher by 5.9 per cent to $1.17, Northern Star Resources up 4.5 per cent at $6.23 and St Barbara up 4.3 per cent to $3.88. Gold-sector heavyweight Newcrest Mining jumped 2.9 per cent to $26.62.

The moves for the gold sector came as the precious metal hit a four-month high on Friday as the US dollar index hovered at around three year lows. Gold futures were at $1342.40 an ounce in late Monday trade.

"The knock-on from a falling US dollar has once again been good strength in precious metals," said IG Markets' Chris Weston.

"The big consensus trade of being short US dollar into 2018 and long European and US financials continues to work in earnest and this remains the key focal point in the week ahead."

The big diversified miners moved higher as well although the gains were slightly less pronounced, with BHP 1.2 per cent at $31.90, Rio Tinto up 1.5 per cent at $81.80 and South32 higher by 2.6 per cent at $3.97.

Those moves worked to offset declines in the energy sector, with Origin Energy down 1.8 per cent at $9.40 and Santos down 1.3 per cent to $5.45 after a broker downgrade.

Companies that can be proxies for bonds were also broadly weak. Telecom heavyweight Telstra eased 0.8 per cent at $3.71 and Sydney Airport lost by 1.3 per cent at $6.68 and investors continued to mull over last week's up-tick in US government bond yields.

In corporate news, Woolworths shares ended the day flat at $27.25 after it told investors it had appointed one of its most senior executives, Steve Donohue, to run its $8 billion liquor business following the retirement of managing director Martin Smith.

Vocus Group shares lifted 0.9 per cent at $3.24 after the telco said it had divided the enterprise and wholesale divisions of its Australian business into separate operating segments, in a bid to restore shareholder value.

- With wires

Stockwatch - Origin Energy

Origin Energy shares lost ground on Monday, with the energy major losing 1.8 per cent to trade at $9.40 after it was downgraded by UBS energy analyst Nik Burns to neutral. Mr Burns suggested that oil and spot LNG prices may have rebounded too quickly. LNG spot prices last week extended the upward track they have followed since mid-2017, reaching $US11.356 per million British thermal units. They have now more than doubled since July, driven largely by rapidly expanding demand in China as factories and power plants are forced to shift to gas from coal.

Aussie dollar

The Australian dollar hit a four-month high on Monday, extending gains made last week on stronger-than-expected local economic data and amid some optimism on the strength of the Chinese economy. The Aussie fetched US79.48?? in late Monday trade, after ending last week at US79.17??. The gains for the currency came as the US dollar hovered around three-year lows. Relative interest rate expectations are moving against the greenback, CBA currency analyst Elias Haddad noted. "Encouraging Chinese economic activity and favourable Australian December employment conditions will underpin a higher Australian dollar," he added.

Gold

Gold traded at $1342.40 an ounce on Monday after the precious metal hit a four-month high on Friday when the US dollar fell sharply against the euro amid hope for an agreement for a political coalition in Germany. A stronger euro makes dollar-priced bullion cheaper for European investors. Gold prices were also supported after US president Donald Trump gave the Iran nuclear deal a final reprieve on Friday but warned European allies and Congress they had to work with him to fix "the disastrous flaws" in the pact or face a US exit. "This is a last chance," Mr Trump said in a statement, which fed investor worries and boosted safe-haven demand for gold.

Asia markets

Asian shares hit historic highs on Monday following Friday's fresh record highs on Wall Street and softness in the US dollar. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent, having finally cleared the former all-time top of 591.50 from late 2007. Investors are also optimistic that Chinese gross domestic product data due on Thursday would show growth of at least 6.7 per cent for the world's second biggest economy.

Global stocks

Morgan Stanley strategists are not as bullish on global stocks as they were this time last year. They said they hold this view for a couple of reasons: earnings growth is likely to peak in the first half of 2018; financial conditions are likely to tighten; and sentiment is much more bullish now even though stock prices are 20 per cent to 40 per cent higher and there are other signs of speculation that typically warn of an impending correction, or worse. "Expect a more normal year in terms of total return," they said.