The renewed sell off in global equities over the past two days is not exactly a surprise to investors but it has dashed the hopes of those who believed the worst had come and gone.
It now begs the question of whether what has been happening on financial markets since the end of February is a traditional "10%" correction or something more threatening.
"Markets were clearly premature in thinking 'right, we've done it, let's start behaving as were earlier,” said Dresdner Kleinwort strategist Philip Isherwood. "This isn't going to wash through within a week, " he added.
European and Japanese shares have lost around 3% over the past two sessions and the S&P 500 lost 2% on Tuesday before showing some calm on Wednesday.
The latest trigger was concern about an unraveling of the US sub prime mortgage market in which lending institutions are exposed to higher-risk borrowers.
But this issue has merely been lurking in the background as part of general investor angst about the health of the US economy and an exceptionally high degree of risk appetite driving a wide array of investments higher.
Since "Correction 2007" began roughly at the end of trading on February 26 volatility has soared and markets have gyrated. Recent stock gains, for example, were enough to persuade some that calm at least had returned, if not the rally itself.
This week's sell offs, however, have left the S&P 500 down 5% since February 26, the FTS Euro first 300 off more than 7% and the Nikkei down 8.45%. It may not be enough if market tradition has anything to say about it.
Almost by definition, a correction is expected to slice some 10% off an index - perhaps twice which in riskier emerging markets- particularly if it comes in a bull market, that is, one that is seen as being in a secular rally.
It now begs the question of whether what has been happening on financial markets since the end of February is a traditional "10%" correction or something more threatening.
"Markets were clearly premature in thinking 'right, we've done it, let's start behaving as were earlier,” said Dresdner Kleinwort strategist Philip Isherwood. "This isn't going to wash through within a week, " he added.
European and Japanese shares have lost around 3% over the past two sessions and the S&P 500 lost 2% on Tuesday before showing some calm on Wednesday.
The latest trigger was concern about an unraveling of the US sub prime mortgage market in which lending institutions are exposed to higher-risk borrowers.
But this issue has merely been lurking in the background as part of general investor angst about the health of the US economy and an exceptionally high degree of risk appetite driving a wide array of investments higher.
Since "Correction 2007" began roughly at the end of trading on February 26 volatility has soared and markets have gyrated. Recent stock gains, for example, were enough to persuade some that calm at least had returned, if not the rally itself.
This week's sell offs, however, have left the S&P 500 down 5% since February 26, the FTS Euro first 300 off more than 7% and the Nikkei down 8.45%. It may not be enough if market tradition has anything to say about it.
Almost by definition, a correction is expected to slice some 10% off an index - perhaps twice which in riskier emerging markets- particularly if it comes in a bull market, that is, one that is seen as being in a secular rally.
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