Black Monday 1998 happened late. As European markets closed yesterday, the US stockmarket was down by little more than 1 per cent. By early evening it had fallen lower, with the Dow Jones dropping by as much as 3 per cent, before seeming to recover. And then it just started to head south, dropping by the minute on the electronic screens which record its movements between about 8.15 p.m. and 9 p.m. Irish time last night, until the Dow finally closed down by more than 6 per cent. By any standards it was a big fall and will have an inevitable knock-on to European markets this morning. Measured by the percentage decline, it was among the top half-dozen biggest falls in the Dow Jones since the massive 22 per cent fall in October 1997. Added to last week's decline, US shares have now fallen 10 per cent in just over a week.

All along, economists have warned that the biggest danger to Western economies from the Russian and Asian crises would come if it caused a collapse on Wall Street. Close to half the US public hold some shares and many rely on them for pensions or to back borrowings which they have taken out. A collective loss of confidence by US consumers would have a significant impact on US - and international - economic growth.

The next 24 hours will tell a lot. When the Dow Jones index fell by 554 points on October 27th last year, it surged back the next day with a 330 point gain. Subsequently, the long bull run in the US and other markets continued into the early months of this year. This led to warnings from some that stockmarkets were becoming over-valued - in other words that company share prices were on average becoming too expensive in relation to the likely profits these companies would make. Over the past week - and particularly last night - these fears took hold, as investors considered the potential impact of events in Asia and Russia on the global economic outlook and decided to sell. The immediate cause of last night's collapse can be traced to events in Russia. Financial markets across the world reacted nervously yesterday as the Russian Duma rejected the nomination of Mr Viktor Chernomyrdin as prime minister, fearing that Russia now faces into further political and economic instability.

Indeed, most analysts now fear that the sharp devaluation of the rouble means that a period of massive inflation in Russia is inevitable. However, events in Russia, a relatively small player in international trade, are merely the catalyst of last night's share fall. Investors internationally have watched the currency crisis spread from Asian economies through to Russia. And in the US they are looking nervously south, looking at the upheaval now affecting markets such as Mexico, Venezuela and Brazil, and wondering how it will all add up in terms of international economic growth and the health of sectors such as banking, many of which are heavily exposed through loans to troubled economies.

However, another factor took hold last night on Wall Street. Fear. As one analyst put it, major institutional investors sold off stock as they were hit by "fear of losing money, of being left holding the bag". And make no mistake, those selling shares last night were the investment professionals that run the major funds. In the words of one analyst: "This was all institutional sell programmes. This wasn't Mom and Pop selling 100 shares at a time."

So where next? European markets are sure to take a hit this morning - particularly London which was closed yesterday for the bank holiday - and will then await the opening on Wall Street. While many analysts on Wall Street were arguing last night that there was no fundamental reason for the share sell-off in terms of the economic outlook, such reasoning could matter little when the US opens for business today. Sentiment will be the key and dealers across the world will not be leaving their desks for lunch tomorrow as they wait to see whether Wall Street will bounce back, or drag international markets lower again.