Australia’s share market has surged by more than two per cent ahead of big spending expected in the federal budget, and news US President Donald Trump could leave hospital as early as Monday (US time).

The S&P/ASX200 benchmark index was higher by 135.2 points, or 2.33 per cent, to 5926.7 points at 1200 AEDT on Monday.

The All Ordinaries index was up by 136 points, or 2.27 per cent, to 6119.2.

Energy was the top sector and had a 4.38 per cent gain. Financials was next, up 3.32 per cent.

Materials was higher by 1.89 per cent while there were gains of more than two per cent for industrials, property, telecommunications and utilities.

There is plenty of optimism among investors ahead of Treasurer Josh Frydenberg handing down his 2020/21 budget on Tuesday night.

Mr Frydenberg says the budget will be a jobs-focused one with the aim of helping the economy out of its first recession in three decades.

The plan includes $7.5 billion in fast-tracked road and rail projects, a $1.5 billion manufacturing strategy and the possibility of bringing forward personal tax cuts to encourage spending.

The Reserve Bank’s cash rate decision is also due on Tuesday. The target stands at 0.25 per cent.

Global investors may also be encouraged by Mr Trump’s doctors saying the president’s health is improving after his coronavirus infection and he could be discharged as early as Monday.

Mr Trump on Friday revealed he and wife Melania were infected, sparking uncertainty about the leadership and the November 3 US election.

Investors swiped money from the ASX and the index lost 50 points.

There were light trading volumes on the bourse as NSW and Queensland had public holidays.

Among the banks, ANZ was higher by 4.03 per cent to $17.77, the Commonwealth was up 3.01 per cent to $65.64, NAB rose by 3.71 per cent to $18.14 and Westpac was better by 4.10 per cent to $17.25.

In energy, Oil Search was one of the best performers. Shares were higher by 6.34 per cent to $2.68. Beach Energy had a 5.2 per cent gain to $1.31.

In mining, BHP rose by 2.24 per cent to $35.91, Rio Tinto increased by 1.76 per cent to $95.25 and Fortescue climbed by 2.36 per cent to $16.46.

Dairy giant Fonterra will pay down debt with the proceeds from the sale of Chinese farms.

The New Zealand co-operative expects to make $NZ555 million ($A514 million) from the sale of two farming hubs and a majority stake in another farm to Inner Mongolia Natural Dairy Co.

Chief executive Miles Hurrell says the decision to sell two farming hubs in Ying and Yutian and a majority stake in a Hangu farm is in line with its strategy to focus on Kiwi products.

Fonterra shares were suspended from trading.

US markets had mild losses on Friday after Mr Trump’s diagnosis.

There was some optimism that Washington may be able to get past its partisanship to deliver more support for the economy.

House Speaker Nancy Pelosi told airlines to stop standing down workers because aid is imminent.

The Aussie dollar was buying 71.83 US cents at 1200 AEDT, higher from 71.41 US cents after the close of trade on Friday.