The Australian share market has closed higher, despite pulling back through the afternoon.

Australian stocks had opened strongly after Wall Street made a comeback on Friday and the $2.5 trillion US stimulus bill moved closer to becoming law.

The ASX 200 closed 0.4 per cent higher at 6,739 points, after being up by as much as 1.8 per cent earlier in the session.

At 4:40pm AEDT, the Australian dollar was slightly higher, buying around 77 US cents.

Around the region, markets in Asia were in the red, with Tokyo's Nikkei down 0.5 per cent after giving up an early rally.

The initial optimism during the session had followed the US Senate passing President Joe Biden's $US1.9 trillion stimulus bill over the weekend, bringing it a step closer to becoming law.

"Views on what it all means for the economy, inflation and with that markets, should dominate proceedings this week," NAB strategist Ray Attrill said.

However, US stock market futures dipped into the red during Asian trade, which saw the rally fade.

Bonds continued to sell off as investors increased bets of a faster economic rebound this year — US 10-year Treasury yields hovered near one-year highs.

Most sectors of the local market rose, led by education services and mining stocks, but industrial, real estate and health care stocks slipped into the red.

The best performing stocks of the session were Treasury Wine Estates (+6.4pc), Silver Lake Resources (+6pc) and Janus Henderson (+5.2pc).

On the flipside, the worst performers were Zip Co (-6.7pc), Kogan (-5pc) and Smartgroup (-4.6pc).

Santos shares fell 2.7 per cent, after the company's largest shareholder sold about a third of its stake in the oil and gas company.

Chinese energy firm ENN sold off around 107 million shares in Santos, a 5.1 per cent holding, but remains its largest single shareholder with a near 10 per cent stake.

Other energy stocks rose strongly, including Oil Search (+3.4pc) and Beach Enegy (+4.1pc), after a rally in oil prices, with Brent crude futures jumping above $US70 a barrel for the first time since the pandemic began.

Major miners, including Fortescue (+0.5pc), BHP (+2.4pc) and Rio Tinto (+2.9pc), ended in positive territory but off their highs of the session.

Westpac tips return to pre-pandemic economic activity

After last week's figures showed the Australian economy recovering faster than expected in the final quarter of last year, Westpac economists upgraded their forecasts for the current quarter.

Westpac chief economist Bill Evans has now forecast the economy to expand by 1.6 per cent over the first three months of the year.

"The level of [gross domestic product] GDP in the March quarter is expected to exceed that in the December quarter of 2019 by 0.4 per cent, returning activity to pre-pandemic levels one quarter earlier than we had previously expected," he said.

Westpac economists now expect GDP growth of 4.5 per cent over 2021, compared to their previous forecast of 4 per cent, followed by 3 per cent expansion in 2022.

Meantime, RBC Capital Markets has increased its annual GDP growth forecast to 4.7 per cent, given that the economy ended last year stronger than it had forecast.

"While the consumption recovery has been underway largely since mid-2020, we expect business investment and [residential] investment to contribute more to activity this year compared to 2020," RBC chief economist Su-Lin Ong said.

Wall Street rallies on stronger-than-expected jobs figures

On Friday, the major US indices staged an afternoon comeback, with the S&P 500 ending 2 per cent higher.

The US non-farm payrolls report revealed a stronger-than-expected picture of the country's jobs market, with 379,000 jobs added in February and January's figures revised upwards.

Meanwhile, the US unemployment rate edged lower, to 6.2 per cent.

"The data imply that the labour market is responding to the December fiscal stimulus and that the lull in hiring over the turn of the year is over," ANZ economists wrote in a note.

However, US Treasury Secretary Janet Yellen tempered the optimism, pointing out that the true unemployment rate was around 10 per cent, as four million Americans have dropped out of the labour force during the pandemic.

ABC/Reuters