Hong Kong shares increased by 1.4% while Chinese blue chips gained 0.7%. The Chinese yuan strengthened to its lowest level under 6.8000 since mid-August. The largest MSCI index of Asia-Pacific equities outside of Japan increased by 2.0% to reach its highest level in five months, with South Korean shares rising by 2.2%.

Despite the fact that the Nikkei in Japan was closed due to a vacation, futures were trading at 26,215 compared to a cash close of 25,973 on Friday. Both Nasdaq and S&P 500 futures increased by 0.2% and 0.3% respectively.

Futures for the FTSE index rose 0.3% while those for the EUROSTOXX 50 index rose 0.6%. The largest U.S. banks are the first companies to report earnings this week, and the Street anticipates no overall earnings growth from the prior year at all.

"Excluding Energy, S&P 500 EPS (earnings per share) is expected to fall 5%, driven by 134 bp of margin compression," analysts at Goldman Sachs wrote. "Entering reporting season, earnings revision sentiment is negative relative to history.

"We expect further downward revisions to consensus 2023 EPS forecasts," they added. "China reopening is one upside risk to 2023 EPS, but margin pressures, taxes, and recession present greater downside risks."

Reports that Goldman might begin laying off thousands of employees starting on Wednesday as it braces for a challenging economic environment were a symptom of the strain. Since the beginning of the COVID-19 pandemic, Beijing's borders in Asia had been all but closed, but suddenly they have been opened, allowing a spike in traffic throughout the country.

According to Winnie Wu, an analyst at Bank of America, the second-largest economy in the world, China, is expected to gain from a cyclical upturn in 2023. She also forecasts market growth through multiple expansions and 10% EPS growth.

Last week, a benign mix of steady increases in U.S. payrolls and slower wage growth, together with a significant decline in service-sector activity, helped lift sentiment on Wall Street. Bets on rate increases by the Federal Reserve were reduced by the market.

Fed fund futures currently predict a 25% likelihood of a half-point increase in February, down from a 50% chance one month ago. Due to this, investors will be extremely attentive to anything Fed Chair Jerome Powell may say at a central bank conference on Tuesday in Stockholm.