Reports that the US intends to ease travel restrictions for passengers who have been vaccinated and are visiting the US from the UK or EU has led to an increase in airline shares.
British Airways shares rose 11% to become the highest-ranking riser on the FTSE 100. Rolls-Royce, a jet engine manufacturer, ranked second with shares rising more than 5%. The shares in German airline Lufthansa as well as Air France-KLM rose by about 7%.
These rises were triggered by reports that the Biden administration is preparing to lift a ban on tourists from the UK and EU, which was imposed in March 2017 by Donald Trump.
According to Neil Wilson, Markets.com's chief market analyst, IAG shares have just risen on news that the US will ease restrictions on UK and EU travelers. IAG, the BA owner, is the clear winner as its transatlantic business was virtually dead since the US policy.
It was however a difficult day for markets overall, with investor fears mounting about rising inflation, weaker growth and contagion in China's property sector, which were triggered by Evergrande, a debt-stricken developer.
Europe's Stoxx 600 was 1.8% lower on Monday afternoon. It is a pan-European index that tracks listed companies. The UK's FTSE 100 fell by more than 70 points or 1% to 6,891.
The shares in Germany, France, and Italy were down more than 2%. Spain was down 1.2%. The US markets opened lower with the Dow Jones falling 1.6%, S&P 500 dropping 1.5%, and tech-friendly Nasdaq closing down 1.8%.
Analysts warn that rising energy costs and inflationary pressures could cause a global economic crisis. This is at a time of slowing growth in many advanced economies.
The US Federal Reserve and Bank of England will update investors this week. Financial market investors expect a gradual withdrawal from emergency pandemic stimuli at an important juncture in the economic recovery from Covid-19.
Walid Koudmani is a market analyst for XTB Online Trading. He said that investors will be closely monitoring the upcoming decisions of the central bank later in the week and any developments in China's real estate market, which could possibly cause a domino effect.
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In August, the annual rate of UK inflation rose by the highest level since records began. This was due to a quick recovery from last year's lockdown and a sharp rise in food, drinks, and energy prices.
In recent months, wholesale gas and electricity prices have risen to new records. This has forced several small energy suppliers into administration. It is now possible that this will lead to a crisis in the cost of living for British consumers.
Investors raised concerns about contagion risks in China's heavily indebted property market, which could spread to other markets after Evergrande shares plunged Monday to an 11 year low.
As the company tries to rebuild trust in its business, the country's second-largest realty developer is facing a deadline for paying off its debts this week.
Experts warn that defaulting on the company's debts, which total $300bn, could lead to wider problems in the world's second largest economy.
Analysts believe that any Chinese downturn will have an effect on the demand for natural resources. China is the world's largest consumer of many commodities. This has worrying parallels to 2015, when financial markets were slashed by fears over Chinese debt problems.
Russ Mould is an investment director at Manchester-based stockbroker AJ Bell. He said that there are many things for the market to worry about. Those who were arguing the market was looking frothy are now seeing some of the froth disappear. A brewing crisis with China, rising gas prices in Europe, and worries about stagflation all combine to sink stocks.
