In the UK, the FTSE 100 fell by 7% in early trading taking the index below the 5,000 mark for the first time since 2011.

Other European markets also plummeted, while in Asia, markets closed sharply down.

Yesterday, the US Federal Reserve unexpectedly cut interest rates to practically zero and launched a new $700bn round of quantitative easing.

Other central banks, including the Bank of England, promised a level of support not seen since the peak of the global financial crisis in 2008.

However, the aggressive action did nothing to stem investor concerns.

Adrian Lowcock, head of personal investing at investment platform Willis Owen, said: “Markets remain rattled. Falls in Asia overnight have been followed by sharp sell-offs in the UK and across Europe today, with similar moves expected later in the US.

“Until we see an end in sight for the virus and the number of infections globally peak, markets are going to be extremely volatile, and it’s likely going to get worse before it gets better, so investors must brace themselves in the near term.”

Last week, the FTSE 100 suffered its worst day since 1987’s Black Monday, diving almost 11% and wiping £160bn off the value of the index.

Ayush Ansal, chief investment officer of investment firm Crimson Black Capital, said: “The fall of the FTSE 100 and other European exchanges on Monday’s open following the Fed’s action highlights the problem policymakers are facing.

“The shock to markets and economies from Covid-19 is so unique that monetary policy alone will not be effective enough.

“Monetary policy will have to work in tandem with radical fiscal measures to reduce the severe economic fall-out from Covid-19.”