Britain's top stock index suffered its worst year in a decade, as economic concerns, Brexit's uncertainty and the US-China trade war have scared investors.
The FTSE 100 index fell 12,5% in 2018, its biggest annual decline since 2008, eliminating more than £ 240 billion in shareholder value.
Tobacco stocks were among the hardest hit, with US regulators announcing a crackdown on flavored electronic cigarettes and menthol cigarettes. British American Tobacco lost half its value during the year.
Shares of major home builders also fell sharply amid fears that a strong Brexit would cause major economic upsets. Taylor Wimpey fell by a third during the year and the Berkeley Group fell 17%.
Some investors are deeply concerned that the US economy may be slowing even as the country's central bank raises interest rates, despite protests from Donald Trump.
"Markets are torn between recession fears and the hope that it's just another false alarm," said Holger Schmieding of German bank Berenberg.
"As the saying goes, financial markets tend to predict nine out of five recessions. For economists, it's probably the opposite, though. Economic fundamentals remain largely positive. What we may have to fear in 2019 is fear itself and the risk of extraordinary political stupidity, far beyond the usual difficulties of life. "
President Trump's trade war with China and the federal government's halt, triggered by his demands as a border wall with Mexico, are also weighing on the markets as they enter the new year.
The US has now imposed $ 250 billion of Chinese imports, and Trump is threatening to increase contributions unless Beijing changes its trade practices before March.
"There is a growing realization that the economic structures that have operated for most of the decade after the 2008 crash are shifting in ways that could be quite damaging to economies and to businesses and therefore to financial markets," said Milligan.
"With the extent of the trade dispute between the United States and other countries, it was known that by January 1 of January last year there would be a disruption in trade, but I think the extent of this was worse than people realized."
Australia's stock market posted its worst year since 2011, dropping 7% amid new evidence of falling credit in real estate and growing concern over the weakening global economy.
The Brazilian Bovespa index rose 15% during the year, although investors received the rise of extreme right candidate Jair Bolsonaro to the Brazilian presidency and made the Bovespa the global index of better performance.
The wave of tariffs applied by Washington and Beijing has damaged the Chinese economy. Data released on Monday showed that the Chinese manufacturing sector is shrinking for the first time in two years in a possible sign that the US-China trade dispute is charging its price and could have major consequences early in 2019.
Investors comforted Trump, who tweeted on Saturday that he was making "great strides" in talks with President Xi Jinping. This helped propel a small New Year's Eve rally on Wall Street, with shares rising about 1% at the beginning of the talks.
Milligan believes that "a degree of uncertainty and concern" could be lifted from markets if Trump and Xi reach agreements to resolve the US-China trade dispute before more tariffs are imposed.
Source: The Guardian