Is this the start of a global stock market sell-off?

UK savers hammered as White House sounds alarm over flash crash on Wall Street

SHARES around the world tumbled yesterday as the Dow Jones suffered a flash crash and fears grew that stock markets were on the brink of a prolonged sell-off.

The FTSE 100 suffered its fifth straight day of losses, and on Wall Street the Dow Jones Industrial Average fell 1,175 points in a brutal rout after panic gripped the market in the final hours of trading last night.

The Dow recorded its biggestever daily fall of more than 1,500 points before recovering in what was dubbed a flash crash. However, it still finished 4.6pc down.

All eyes will now turn to the opening of the FTSE this morning to see if the jitters spread across the pond.

The US slump followed a 665 point collapse on Friday – the sixth biggest fall of all time. The Dow Jones has now suffered losses in four of its last six trading days.

Yesterday morning markets in Asia sunk as experts worried that interest rates around the globe would rise by more than previously thought. Nearly £28bn was then wiped off the value of share prices in the City, on a punishing day for savers and pensioners with money tied up in the stock market. The FTSE 100 index dropped 108.45 points, or 1.5pc, to 7334.98.

The blue-chip index has now lost 5.9pc of its value since hitting an all-time high of 7792.56 on January 12 – costing investors £117.6bn.

The slump fuelled fears that global stock markets have peaked and are now set for a correction as central banks around the world, led by the Federal Reserve in the US, raise interest rates to tame inflation.

The White House yesterday admitted it was worried. ‘We’re always concerned when the market loses any value, but we’re also confident in the economy’s fundamentals,’ an official said.

Throughout his presidency, Donald Trump has trumpeted the strength of the stock market, and despite the recent falls the Dow is still up nearly 40pc since the election.

But Tony James, president and chief operating officer of fund manager Blackstone, warned that further stock market falls were ahead.

‘People have been saying for a long time that stocks are overvalued,’ he said. ‘I think we could easily see a 10pc to 20pc correction sometime this year. We have got 5pc already. Every historic norm says stocks are very, very fully valued.’

He warned that President Trump’s tax cuts could turbocharge the US economy to such an extent that the Fed is forced to raise rates by more than currently expected.

The turmoil was echoed across Europe, with the stock market down 0.8pc in Germany, 1.5pc in France, 1.6pc in Italy and 1.4pc in Spain. In Asia, the Hang Seng fell 1.1pc in Hong Kong and the Nikkei was down 2.6pc in Japan.

Fears over rising inflation and higher interest rates have rattled investors in recent days – particularly in the US.

An upbeat jobs report in the US on Friday fuelled speculation that interest rates could rise four times this year.

It had previously been thought that the Fed would raise rates only three times as it seeks to keep a lid on inflation.