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US shares retreat overnight as volatility hits two-year high

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Shares on Wall Street have recorded the worst three-day streak since 2011 after another sharp move lower overnight, with investors continuing to fret over the end of the US Federal Reserve's bond buying programme.

With the Fed poised to stop purchases at the end of this month, markets are seeing huge increases in volatility as the era of money printing which has propped up markets for so long finally gets removed.

While the removal of stimulus signals the US economy has healed to some extent, investors remain unconvinced the strength of that recovery is enough to keep share prices at these levels. 

As a result, traders used the impending removal of QE to sell shares once again, with US stocks sliding last night.

The S&P 500 closed down 1.7 per cent, taking one month losses to around 7.5 per cent, while the Dow dropped another 1.4 per cent.

Losses in the US were then mimicked in Asia, with the Nikkei 225 down another 2.3 per cent, and Topix off by the same margin.

Markets have been moving around frantically as the struggle between resurgent growth and withdrawn stimulus plays out.

The VIX index, which measures volatility in markets, has risen to 24.6 per cent according to Reuters, the highest level since June 2012 when the world’s financial markets were rattled by the European sovereign debt crisis.

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