Australian shares closed higher on Monday, amid raised bets of interest rate cuts next month.

The S&P/ASX 200 rose 1.3% or 108.6 points to close at 8,525.1.

Investors are betting on more than a 60% chance of a rate cut at the Fed's policy meeting in December, after New York Fed President John Williams suggested the central bank could cut interest rates again "in the near term."

"Comments from Fed's Williams on Friday reminded that the fed funds rate cut in the December FOMC remains on the table, prompting a notable market reaction," said Mantas Vanagas, Senior Economist at Westpac Group.

In company news, Qube Holdings (ASX:QUB) entered a process deed with Macquarie Group's (ASX:MQG) Macquarie Asset Management unit after the receipt of a revised conditional non-binding indicative proposal to acquire the company's shares for AU$5.20 in cash per share via a scheme of arrangement. Shares of the company rose past 19% at market close and earlier hit a 52-week high.

DroneShield (ASX:DRO) reaffirmed that its financial reporting practices fully comply with all applicable accounting standards and that it follows strict compliance procedures under Australian export control legislation and its internal controls. Shares of the company rose 2% at market close.

Lastly, BHP Group (ASX:BHP) confirmed that it is no longer considering a merger with Anglo American after early discussions with the latter's board. Shares of the company rose 1% at market close.