Global stocks were on track to post their biggest weekly decline since the height of the euro zone crisis on Friday, after a late slump on Wall Street triggered another dramatic sell-off.

The MSCI’s broadest index of global shares — which captures worldwide equity returns in 23 developed and 24 emerging markets— slipped 6.2 percent over the past week. And, as long as the index is still more than 6.1 percent lower when U.S. markets close later on Friday, will mean it falls to its worst weekly loss since September 2011.

Asian stocks continued a market rout on Friday, as Chinese equities dived 4 percent. Both of Beijing’s major indexes posted their largest single-day losses since February 2016. Meanwhile, in Europe, stocks were mostly trading lower on Friday morning, as investors monitored the release of fresh corporate news while keeping an eye on market turbulence across the world.

Many market watchers believe the market turmoil over the past week is reflective of a long overdue pullback after substantial gains in 2017 and early 2018. The recent selling is also thought to have been exacerbated by expectations of higher U.S. interest rates.

This is not a ‘macroeconomic event … yet’

“It is not obvious to me that the market has hit a floor yet,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told CNBC on Friday.

Shepherdson said he was in agreement with New York Fed President Bill Dudley, in that the recent market turmoil was not evidence of a “macroeconomic event … yet.” Therefore, the Fed would likely continue to raise interest rates throughout 2018, he added.

U.S. stocks fell sharply on Thursday, as robust corporate earnings and strong economic data did little to offset Wall Street jitters about higher interest rates. The Dow Jones industrial average closed over 1,000 points lower at 23,860.46, entering correction territory. The 30-stock index also closed at its lowest level since November 28. The Dow is also on track to post its biggest weekly decline since October 2008.

The moves on Wall Street consequently dampened sentiment in Asia and Europe, with investors watching closely to see if global indexes go into a correction.

‘Short volatility flash crash’

U.S. stocks have generally been moving higher for about nine years and during that time, indexes have gained around 300 percent, not including dividends.

Nonetheless, over the past year, the record bull run has been viewed with skepticism by many market watchers, who have frequently warned against historically overvalued stock prices. The main drivers of so-called inflated asset prices are thought, in part, to stem from synchronized global growth, unhinged exuberance among traders and prolonged stimulus from central banks.

“Investors were reminded of market-intrinsic risks by the fact that some of the latest product innovations went up in smoke, taking stock markets halfway with them,” Christian Gattiker, chief strategist and head of research at Julius Baer, said via email on Friday.

“We doubt that we will ever learn the truth behind what will go down in financial history books as the short volatility flash crash,” he added.

News Reporter

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