Global markets have fallen over the last two weeks and given back much of the gains achieved this year. In the UK, both the FTSE 100 and 250 indices officially corrected by dropping more than 10% since their 52-week highs in May and June, respectively, falling in almost every trading session so far in October. The FTSE has now fallen below 7000 to a level first seen at the start of the Millennium. In the US last Wednesday, the Dow’s 830-point drop was its third largest ever, accompanied by falls in the S&P500 and the technology-weighted Nasdaq which fell 4% on the day. European, Asian and Japanese markets were not immune from the contagion.

The markets have shown more fragility since the Federal Reserve raised interest rates in September, but the aggressiveness of forthcoming rate rises to curb inflation have concerned investors over the cost of borrowing and the expected slowing of the economy. Rising bond yields have unnerved the equity market, with the 10-year Treasury yield now at a 7-year high. Higher interest rates typically bring on tighter financial conditions and rising bond yields could now be signalling the move from growth stocks with high valuations and lower dividends into previously unloved value stocks.

The International Monetary Fund (IMF) has downgraded its outlook for global growth, citing the ongoing trade wars, rising interest rates and instability in emerging markets. It has forecasted that growth will be 3.7% this year and next, down from 3.9%. The UK economy ground to a halt in August due to concerns over Brexit, but still registered 0.7% for the quarter, putting it on track to reach an annual growth rate of 1.5%. The IMF has urged the UK to lift public spending in the case of a full Brexit, saying that monetary policy should be flexible, implying lower interest rates; this contradicts the Bank of England’s view that rates would rise if there is a hard Brexit or no deal at all. EU leaders meet this week in what is expected to be a “moment of truth” for Brexit negotiations.

Finally, shares in cake shop and café, Patisserie Valerie, were suspended last week after accounting irregularities totalling £20m were discovered. The company, which has 206 outlets in the UK and employs around 3000 staff also received a winding-up petition against one of its subsidiaries in September, with HMRC seeking £1.4m in taxes. Finance Director Chris Marsh was arrested and suspended from duties. The company has been saved from collapse by loans of £20m from Chairman and major shareholder, Luke Johnson, the restaurant entrepreneur, with the icing on the cake being a further £15m from a raising of new shares.