Markets in fragile mood as Federal Reserve prepares to raise interest rates

Shares plunge and oil prices tumble as investors become nervous at Fed decision marking US economy's strong recovery since 2008

Stock market investors are bracing for panic selling in New York and London before what is expected to be the first rate rise by the US Federal Reserve since 2006. The US central bank will decide on Wednesday whether to raise interest rates as a mark of the US economy's strong recovery since the 2008 banking crash.

Fed boss Janet Yellen is expected to announce the increase in borrowing costs despite a slowdown in global trade and a slump in oil and commodity prices that has pushed inflation down to almost zero in most developed countries. Shares plunged on Friday and oil prices tumbled as the date neared for the Fed decision and investors became increasingly nervous of the impact on highly indebted emerging market economies.

Related: The rate rise heard around the world: Janet Yellen prepares for her big decision