Global equity markets dropped to their lowest levels in two and a half years yesterday to put them on pace for one of the most dismal monthly performances on record, as oil once again tumbled to 13-year lows.

The MSCI World equity index slumped 3.4 per cent to its lowest level since June 2013. The index has already dropped 11.1 per cent in January, which if sustained would be the worst monthly loss since October 2008, the month after Lehman Brothers went bankrupt.

The declines left the index down 20.5 per cent from its high on May 22, confirming a bear market on an intraday basis, generally defined as a drop of more than 20 per cent.

Wall Street tumbled more than three per cent, with each of the 10 major S&P sectors down more than two per cent, led lower by a drop of almost six per cent in the energy sector. Nearly 200 stocks in the benchmark S&P were down 20 per cent or more from their 52-week high.

The Dow Jones industrial average fell 502.56 points, or 3.14 per cent, to 15,513.46, the S&P 500 lost 59.34 points, or 3.15 per cent, to 1,821.99 and the Nasdaq Composite dropped 126.79 points, or 2.83 per cent, to 4,350.16.

US crude plunged to a low of $26.30, its lowest since May 2003 after the International Energy Agency warned the market could “drown in oversupply.” WTI was last off 6.6 per cent to $26.59 while Brent crude lost 4.8 per cent, to $27.38.

European shares closed at their lowest level since October 2014, with the FTSEurofirst 300 down 3.3 per cent, to notch its biggest single-session decline in six weeks. France’s CAC and Britain’s FTSE both tumbled more than 3 per cent for their worst declines of the year and Germany’s DAX lost 2.8.