The bloodbath in global markets is showing no signs of abating as investors continue to flee from risky assets.
The pressure on President Donald Trump was ratcheted up another notch after the US market close on Wednesday after former FBI director Robert Mueller was appointed as special counsel to investigate Russian efforts to influence the November election, and markets have responded in kind.
Safe haven assets climbed in early trading on Thursday, with gold adding 0.3% and the yen strengthening as much as 0.5% against the US dollar. Traders are also buying US 10-year Treasury notes, pushing their yields down 3 basis points to 2.19%.
Meanwhile, S&P 500 futures sunk 0.3% in pre-market trading, while the Stoxx Europe 600 and MSCI All-World Indexes each dropped more than 0.9%.
The sell off in US equities on Wednesday also caused a spike in trader anxiety, with the CBOE Volatility Index (VIX), which serves as a barometer of investor nervousness, surging 46%. That was the biggest increase since June 24, a big shift for the gauge, which had hovered close to its lowest recorded level for weeks.
However, it's important to note that US stock investors have made a habit of buying on weakness throughout the eight-year bull market. Following the United Kingdom's vote to leave the European Union last June, the S&P 500 fell 5.3% over two trading sessions, only to make up those losses in about a week.
The same dynamic was in play when China unexpectedly devalued its currency in August 2015. After the S&P 500 underwent an 11% correction, traders bought the dip and restored the benchmark to its pre-sell-off levels within about two months.
Still, investors are markedly less hedged than they were in those two situations, as indicated by the VIX's near-record low level heading into Wednesday. That could make the market more susceptible to a downward shock or, worse yet, leave it less able to recover as quickly.