US markets were initially affected when building equipment producer Caterpillar cut its profit forecast on Friday. It blamed problems in the various industries it supplies, including the US housing market. The Dow Jones closed on Friday at 13522.02 after the 366.94-point fall.

As of 12.15 am today, all UK indices are down – the FTSE 100 had lost 93 points to reach 6434.90, the All-share was down 49.65 points and the FTSE AIM 100 was at 5419.70 after an 82.70-point drop. Markets in Europe have seen similar losses. Paris’s CAC 40 Index has lost 97.69 points to 5642.79 and the German DAX index has reached a value of 7783.67 after a 100.45-point fall.

Twenty years ago last Friday, the Dow Jones Index fell by 508 points or 23 per cent, which is equivalent to more than 3,000 points today. Dubbed Black Monday, 19 October 1987 also saw the FTSE 100 drop by 11 per cent in one day, led by the Dow’s drop. Other markets around the world were also affected, such as the Australian Stock Exchange, which lost 25 per cent on 20 October 1987.