The UK's leading share index is facing its worst day since the financial crisis after £130bn was wiped off the value of top shares in early trading.
The dramatic drop follows global falls as a row between Russia and Saudi saw oil prices plunge by more than a fifth.
Shares were already reeling from fears of the impact of the coronavirus as cases globally continue to rise.
The day has already been dubbed "Black Monday" by analysts who described the market reaction as "utter carnage".
Oil prices are down more than 20% with Brent crude trading at $35.98 a barrel.
"It shows a level of nervousness in the market which I haven't seen in a long time," said Justin Urquhart-Stewart, co-founder of Seven Investment Management.
Investors are selling stocks at such a rate because they cannot quantify what Saudi Arabia and Russia might do, he said.
Oil firms Shell and BP both fell 15%.
Why should I care if stock markets fall?
Many people's initial reaction to "the markets" is that they are not directly affected, because they do not invest money.
Yet there are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.
Pension savers mostly let experts choose where to invest this money to help it grow. Widespread falls in share prices are likely to be bad news for pension savers.
As much as £600bn is held in defined contribution pensions at the moment.
So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.