WIPEOUT: European markets tank, fear surges

Anyone hoping to put the volatility of last week behind them was sorely disappointed today.

Markets around the world went into panic mode last week after "Black Monday" on the Shanghai Composite index in China. By the end of the week though, the FTSE 100 had managed to pull back to more or less where it was before the chaos.

But it's right back in the mixer again today - the London Stock Exchange's leading index just closed down 3.13%, or 195.74 points lower at 6052.20. It's the FTSE 100's first session since Friday, following a Bank Holiday on Monday, and it looks like volatility is back in a big way, as you can see from the chart below.

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It's the same for markets across Europe - the Euro Stoxx 50 is down 2.9%, the DAX is 2.4% lower, the CAC 40 is off 2.4%, and the IBEX is down 2.6%. The only major national indices in Europe I could find making small gains were those of Serbia and Bulgaria.

The reason for the wipeout is manufacturing - dreadful Chinese figures overnight reignited fears over the country's slowing economy. Poor European manufacturing figures a few hours later didn't help.

US markets are also diving and the opening of Wall Street lower was a further kick in the teeth for Europe.

Amongst all this chaos, one index is jumping - the VIX. The volatility index is a measure of how much volatility traders expect over the next 30 days, often called the fear index.

The VIX jumped at the start of last week and although it's pulled back slightly from those highs, it's still way above anywhere it's been so far this year. Today the VIX is up 8.4%. Strap in...

Investing.com