The US stock market has seen its worst half-year since 1970. This is due to growing concerns about how inflation will impact economic growth.
The benchmark S&P 500 index has fallen 20.6% in the past six months. Other major US indexes have also suffered sharp drops.
Stocks across Asia, Europe and the UK have also experienced steep losses.
This is because central banks all over the globe are trying to control rising living costs. Prices of essential goods such as food and fuel have jumped.
As interest rates rise, some economists predict that the US, the largest economy in the world, will enter a recession this year.
"If the US Federal Reserve keeps hiking rates, the stock market will react quite negatively," Dan Wang of Hang Seng Bank China, chief economist, said to the BBC.
Shane Oliver, AMP Capital stated that shares will see continued volatility because central banks tighten to combat high inflation. The war in Ukraine continues and there are still high fears of recession.
The Dow Jones Industrial Average, another major US stock index, dropped by over 15% in the first quarter of the year. This is the largest drop since 1962.
The technology-oriented Nasdaq Composite saw a drop of almost 30%. This was its largest percentage decline in the first half a year.
Stock market indexes in major countries outside the US also fell sharply this year.
The UK's FTSE 250 index has declined by more 20%, Europe's Stoxx 600 index has fallen by nearly 17%, and the MSCI index for Asia-Pacific markets has dropped by over 18%.
This comes as the largest central banks around the world take steps to reduce the rising cost-of-living, including increasing interest rates.
Three of the largest central banks in the world warned earlier this week that the days of low interest rates and moderate inflation were over.
The heads of the US Federal Reserve and the European Central Bank, as well as the Bank of England, met in Portugal to discuss how they can prevent price increases from spiraling out of control.
They also warned that the inflation shock brought on by the Ukraine war or pandemic could have a negative effect on global growth.
"Is it possible to go too far?" Jerome Powell, Fed chairman, stated that there is a risk but that it wasn't the greatest risk for the economy.
He said, "The biggest mistake you can make, let's be honest, is to fail to restore prices stability."
The Fed announced last month its largest rate increase in almost 30 years, as it intensified its fight against soaring consumer prices.
The Bank of England raised its key interest rates to their highest level in 13 year, moving from 1% to 1.255%.
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