Global equity markets made a decisive move into bear territory this week amid intensifying concerns about the health of the US financial system and a fresh surge in oil prices.

The MSCI world equity index, the S&P 500 and the FTSE 100 all recorded a drop of 20 per cent from recent highs – joining most of the world’s other main indices in bear markets – as financial stocks came under sustained pressure. At the centre of the storm were mortgage agencies Fannie Mae and Freddie Mac, which between them own or guarantee about half the $12,000bn of outstanding US home loans.