Investors are starting to position themselves for a return of business confidence after the Coalition swept into power at the weekend.
In the first day of trade since the election, Australia's benchmark S&P/ASX 200 Index rose 36.48 points, or 0.7 per cent, to 5181.47, with the big miners doing the heavy lifting. Monday's close leaves the index just 38 points short of the year's high.
Long-term government bond yields also fell slightly - in an early indication that Australian assets are being perceived as less risky - after global credit agencies Standard and Poor's and Moody's kept the country's sovereign rating at AAA.
The big winners from a change of government are expected to be resource stocks, which were buoyed mainly by enthusiasm over the Coalition's pledge to scrap the mining tax despite it so far collecting limited revenue. BHP Billiton and Rio Tinto both advanced 1.4 per cent to $35.64 and $61.95 respectively.
Likewise, the vow to abolish the carbon tax warmed investors, with Qantas rallying 3.8 per cent to $1.37. Origin Energy strengthened in line with the broader market, rising 0.7 per cent to $13.96.
But UBS strategist David Cassidy said although the market generally received Coalition victories favourably in the first three months after an election, he believed a sustained bounce was unlikely this time around.
But a rebound in confidence was the first step, said Equity Trustees chief investment officer George Boubouras. "The second and most important part is business conditions," he said. "That will take much longer to work through.
"We have just completed a reporting season, which confirmed two negative earning seasons in Australia. But with that turnaround in business confidence, conditions will start to improve, probably in about nine months' time."
Mr Boubouras said much of the market enthusiasm stemmed from Canberra returning to what are regarded as normal operating conditions - a government majority in the lower house, with a handful of crossbenchers holding the balance of power in the Senate.
"The blockage for corporate Australia should belong in the upper house. That's just more what we're used to and I think that's naturally what Australians vote for, a bit of a natural hedge. You don't want them to have total control, you want them to have a bit of biffo trying to get something through."
But that "bit of biffo" could derail the return of business confidence, Macquarie Private Wealth division director Martin Lakos said.
Prime minister-elect Tony Abbott has made it clear that he is not afraid of going to a double-dissolution election if the Senate repeatedly blocks legislation - such as scrapping the carbon and mining taxes.
"If it was heading that way [to a double dissolution], we could all go through another period of market uncertainty," Mr Lakos said. "Business decisions get put on hold, consumption slows down again. That's not good for an economy that's running below trend."
In another headwind for Mr Abbott, the Australian dollar hit a three-month high, trading at US92.22¢, before easing to US91.98¢ at market close. Despite the market predicting a rate rise for the first time since 2011 late last week, Mr Lakos said he believed the Reserve Bank's easing cycle was far from over and predicted the cash rate to fall by 50 basis points before the end of this year.
"The amount of monetary policy stimulation that has been coming in hasn't got the traction we all would like to have seen."
But not all investors were convinced. Shares in car lease company McMillan Shakespeare fell 5.4 per cent to $12.68.
Ord Minnett senior analyst James Lennon said although Mr Abbott announced he would abort Kevin Rudd's proposed changes to fringe benefit tax, FBT reform was still on the agenda. He said he believed the Coalition would introduce some changes, but give businesses a "grandfather period" to adjust rather than rush the legislation.