Update: Turbulent Start To US Trading While FTSE Closes At Nine-month Low

After suffering its worst daily points decline in its 122-year history yesterday, the Dow was down 2.1% to 23,824 points soon after US markets opened today, but gained some ground and was only down 0.22% at 24,292 at around 4pm GMT. The S&P 500 dropped 2.1% to 2,593 in the first few minutes of trading but then rallied to 2,682 before falling back again.

Meanwhile, the Vix or 'Fear' index also saw rapid movement as it soared 115% to above 50 before the session started, its highest level since August 2015, before falling back to around 30. This is a huge jump from 14 on Friday.

In Europe today, the UK's FTSE 100 fell 3.5% in opening trading this morning, with every stock in negative territory, as falls in Asian markets overnight spilled over into other global markets.

Financials were hit hardest while a number of investment trusts also suffered heavy losses in morning trading. The Scottish Mortgage investment trust was down 6.5%, Monks had lost 3.48%, and Fidelity China Special Situations was almost 5% in the red, according to Bloomberg. The Witan investment trust was also 3.23% lower and the Foreign & Colonial investment trust had fallen 3.57%.

As trading came to a close in Europe, the FTSE 100 was down 2.64% on the day at 7,141 while Germany's Dax fell 2.32% and the French Cac 40 was 2.4% lower.

The falls followed a tumultuous night of trading in Asia and the US as the Japan's Nikkei 225 fell 7.1% at one point, its biggest point drop since November 1990, while the Dow Jones closed down 4.6%.

Although the Nikkei 225 recovered slightly it closed 4.7% lower than opening levels, trading around 21,610 points at the end of its trading session. Other Asian markets were also further into the red; the Hang Seng was down 3.8% while the Shanghai index dipped 2.6%.

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US equity markets had been in a euphoric state since President Donald Trump passed his historic Tax Cuts and Jobs Act reform, which saw corporation tax cut from 35% to 21%. This pushed the S&P 500 up 5.9%, marking its best start to the year since 1987, prior to the recent pull-back.

However, concerns over central bank policy and higher-than-expected inflation caused global bond markets to sell off on 29 January with 10-year Treasury yields rising to 2.73%, their highest point since April 2014.

Fears of contagion risk subsequently spread to equity markets last week as higher-than-expected US wage growth figures added to concerns the Federal Reserve may have to raise rates further and more aggressively than forecast. Analysts have said the unravelling of popular volatility-linked trading strategies has also added fuel to the sell-off.  

Fund managers have warned the sell-off in bond and equity markets has further to run, as reported in Investment Week yesterday, but they have also welcomed this "healthy" pullback, claiming the increase in volatility does not herald the start of a bear market but is instead an opportunity for investors.