Global markets opened in the red on Monday, with the FTSE 100 falling 1 percent.
The downward trend was attributed to growing fears from investors over the potential introduction of higher interest rates, signalling an end to loose monetary policies of recent years.
This follows similar lows on Friday, with Wall Street seeing its largest decline since the Brexit referendum back in June 2016, falling by 2.5 percent.
US markets fell considerably after strong growth figures on the day, which prompted widespread concern regarding a potential rise in interest rates looming ahead.
Specifically, the latest wage data indicated that average hourly earnings grew by 2.9 per cent in the year to January, marking the fastest growth since 2009.
This week the trend has continued into the European and Asian markets.
In Japan, the Nikkei has dropped by 2.5 percent, marking its largest dip since Donald Trump’s election back in November 2016. South Korean markets also witnessed falls of 1.1 percent, alongside a fall of 1.5 percent over in Australia.
As Jasper Lawler of CMC Markets explained:
“The next day after an unusually big sell-off is always a big test of a market’s strength. A repeat of anything close to the 2% decline seen in US indices on Friday could trigger a prolonged period of risk-off sentiment. Last week the S&P 500 dropped -3.8%, with the energy sector leading the declines.”
He continued, “After gains of 6% in January, the first few days of February were always going to be at risk of profit taking.”
Meanwhile, UK services figures continued to disappoint, falling 53.0 for January, down from 54.2 back in December, according to the latest data from Markit. This ultimately marks a 16-month low, as Brexit uncertainties continue to bite.
According to the PMI, anything at the 50-point mark is indicative of stagnation.
Elsewhere in Europe, Markit’s ‘composite eurozone PMI’ revealed an increase to 58.8 in January from the 58.1 recorded back in December, as economic recovery across the continent continues.