Last week was particularly bad for financial markets worldwide, with the United States leading the downward drop.

In New York, it was the worst week in nearly five years. The S&P 500 index plummeted almost 5 percent. The Dow Jones Industrial Average plunged 440 points on Thursday, close to its biggest drop since 9/11.

In London, the ftse100 index suffered through its worst week since 2003, finishing down 5.6 percent. Thursday’s trading session registered as the most volatile in UK history.

Heavy losses also occurred in Asia, and markets in Europe were lower as well.

In Israel, the stock market trend worsened on Sunday. Tel Aviv stocks closed down a further 4.21 percent (TA-25 Index), a drop of approximately 7 percent in the last two days of trading.

A look at stock exchanges worldwide reveals that major markets are moving in unison more than ever before.

The recent global cascade is the result of new worries concerning a looming global credit crunch, according to bbc News.

“In past years, financial markets, companies and consumers have all benefited from low interest rates and easy access to money, helping fuel a boom in spending, house price inflation and corporate takeovers,” bbc stated July 27.

Trouble may continue as many central banks raise interest rates to alleviate inflation worries. Higher rates mean the cost of borrowing also rises, affecting access to credit as well as prices investors are willing to pay for assets.

However, a bigger threat to credit markets, especially in the U.S. and Britain, is the housing bubble. In America especially, huge investor losses in the subprime mortgage market have caused a re-pricing of risk across the industry. Investors are now less keen to buy any kind of risky loan from banks, and banks are stuck holding the loans on their books—reducing the amount of money available to lend.

With tightening credit markets, the worry is that the takeover boom may be ending, since there will be less fuel for investors and corporations to continue to drive up share prices through corporate mergers and acquisitions.

“We’ve had this massive change in investor expectations in terms of new deal flow,” Fred Dickson of D.A. Davidson & Co. said. “The lifeguards have shouted, and investors are now starting to heed their warnings and head back to shore.”

Does recent stock market action foreshadow a coming global crash? As worldwide stock index figures show, investor confidence in the global economy as a whole is falling.

Signs continue to mount of a global economic crisis on the horizon. A stock market crash is ahead, and global economic leadership is about to pass from the U.S. to Europe. To see how this is already happening in terms of global confidence and reserve currency status, read “New Global Trend: Dump a Dollar, Buy a Euro.”