Monday 20 October 2014 5:55 pm

As the FTSE slips back, could the recent panic in global equity markets continue?

Kerry Craig, global market strategist at JP Morgan Asset Management, says Yes.

We have been warning investors to expect more bumps, and this is exactly what we are seeing.

During the summer, many worried that very low levels of market volatility spelt investor complacency – now, there is concern that volatility has swung the other way. The Vix volatility index has recently touched heights not seen since 2012. But it was at almost double those levels in 2011.

A Vix reading closer to its long-term average of 20 should still be expected for the long run. The main point for investors is to keep this volatility in perspective.

From April to July, there wasn’t a single day with a movement of more than 1 per cent on the S&P 500 index. Relative to those low levels, today’s market moves appear staggering.

But compared to a longer history, such moves can be common over short periods. Pullbacks over many days of 1 per cent to 2 per cent historically occur multiple times a month, even in good times.

Alan Higgins, UK chief investment officer at Coutts, says No.

Economic policy worries, geopolitical risk, Ebola fears, deflation in Europe and a slowdown in global growth are all ostensibly behind the selloff in equities and other so-called risk assets that began in early September.

But we’re sticking with our positive view.

The selloff looks largely technical, rather than being driven by any fundamental change in the economic environment.

Speculation that the world economy may be heading into recession has been triggered by some weak data from the US and Germany.

But if recession was coming, that would be strongly negative for equity earnings and prices. The big economic picture remains sound. Business cycle indicators are positive, and are rising across all the major developed regions.

Moreover, underlying trends in demand and spending are firm. Europe is fragile, but lower oil prices and a weaker euro should mean recession is avoided.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.