After enjoying one of the best weeks on record last week, global equities have today be served a sharp reminder that this is still very firmly a bear market. Markets were on the overbought side last week, but today’s sell off has caught many by surprise. After months of shockwaves caused by complex financial derivatives, today’s sell off is all about old fashioned manufacturing… or rather the lack of it. The latest UK purchasing managers’ survey today showed that UK manufacturing fell at a record pace in November. The falls mirror similar record declines in US manufacturing which also contracted the most since 1992.

A recession has been in train for both the UK and US economies for some time, but optimism or fear over its severity has been waxing and waning over recent weeks as world governments released various stimulus packages. Today is certainly no day for the optimists with investors flying to the safety of US Treasuries, pushing the benchmark yield down to record lows.

The outlook for the UK in particular looks grim, with mortgage lending falling to near record lows. The poor manufacturing data and London Scottish Bank collapsing has sent the pound sharply lower against most major currencies. The chances of another 1% cut from the Bank of England this Thursday have now increased dramatically.

Dave Evans is a market analyst for BetonMarkets, the financial fixed odds betting firm. We do not endorse the information and analysis available in this comment and it is provided purely for information purposes only and is delivered as a personal view by the writer. Under no circumstances is the information in this comment to be used or considered as an offer to sell, or a solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. The investments referred to herein may not be suitable investments for all persons accessing this page. You should carefully consider whether all or any of these are suitable investments for you and if in any doubt consult an independent adviser. We accept no liability whatsoever for any direct or consequential loss arising from use of the information on this web page. Please see our Terms and Conditions.