On May 6, days after the EU moved to implement a huge €750bn bail-out package and on the eve of the UK's knife-edge general election, traders at the world's biggest hedge funds watched as wonderland numbers flickered across their screens.

Shares in Procter & Gamble plummeted 37 per cent on no news. Bluechip corporates traded for cents. In minutes the US Dow fell more than 9 per cent - its second biggest ever intraday movement, after the great crash of 1929. Prices bounced back after this so-called "flash crash," but confidence didn't.

May has been the worst month for the average hedge fund since the collapse of Lehman Brothers in October 2008, according to industry data out yesterday - and for many it is a reminder that, in spite of 18 months of bullish markets, the world is still walking a financial tightrope.

Indeed, to some hedge fund traders eyes, the way individual names moved during the now infamous May 6 movements in the Dow was disconcertingly similar to the events of August 2007 - when previously imperceptible subprime jitters in the credit markets translated into a mass computerised dumping of stocks by the giant quantitative hedge funds AQR, Renaissance Capital and Goldman's Global Alpha fund.

Though no explanation was forthcoming for the causes of the flash crash, it was, in the days that followed, painted as a freak event - idiosyncratic and technical.

Scant comfort was available for many hedge funds, though. On the Thursday and Friday of the first week of May, some lost billions.

David Fuller's view It was inevitable that Wall Street's downdraught on 6th May would cause problems for many leveraged investors, as I have mentioned before. My guess is that most hedge funds have come through that event and subsequent market gyrations in better shape than some prop traders.

What about other consequences?

The froth caused by a 10-week advance into April by many stock markets has certainly been blown away. However Wall Street's three main indices - S&P 500, DJIA and NDX need to hold near their recent lows to avoid some further weakness.

Among other trends, the euro's decline looks overstretched as does the US Dollar Index's advance. US government bond prices look overbought and industrial metals oversold. However we have yet to see any clear evidence that these trends are reversing.