Shares soared in the aftermath of the general election in May, with the FTSE 100 adding 160 points on the day immediately after the vote – but they have since slumped by nearly 500 points, knocking £120 billion off the value of the top listed firms.

UK investors were cheered by the clear victory for the Conservatives, which avoided the expected prospect of an uncertain result and a hung Parliament resulting in days or even weeks of political horse-trading to form a government.

But since then the mood has been shaken by global events such as Greece’s debt crisis, as the country neared the brink of collapse and exit from the eurozone before reaching a deal with its creditors.

More recently, markets have been alarmed by the devaluation of China’s yuan – a move which should shore up manufacturers exporting out of the world’s second biggest economy because it makes their goods cheaper for foreign buyers.

It has the opposite effect on companies trying to sell goods to the Chinese, making them dearer for customers there. The devaluation has also sparked fears of tit-for-tat currency wars as other countries seek to protect their own economic interests.

Another issue looming on the horizon is the prospect of a US interest rates hike which will start to tighten the availability of cheap money which has buoyed equities during the recovery.

Meanwhile, oil stocks have been under pressure as a recovery in the price of Brent crude – after it fell by more than half since last summer – fell apart thanks to the prospect of sanctions against oil-producing Iran being lifted.

Colin Morton, portfolio manager at Franklin UK Equity Income Fund, said: “This weekend, the UK will have experienced 100 days of David Cameron and his Conservative majority government in power, and the changes are noticeable.

“A true blue victory was bound to go down well with the markets, which always respond well to continuity and stability.”

The FTSE 100 rose 2% to 7046.8 on the day after the election, but has since dropped off to below 6570.

It closed on the day of the poll itself at 6887, meaning it is now more than 300 points lower – with the top 100 UK-listed companies losing £80 million in value.

Mr Morton said the fall suggested the “halo effects have worn off” following the post-election euphoria on markets.

The pound also gained following the election. It had fallen to below 1.46 against the US dollar in the weeks prior to the poll amid fears of a hung parliament, but climbed sharply to reach over 1.55 during the session after the vote.

Sterling reached nearly 1.60 in subsequent weeks on expectations of a looming interest rate rise. It is now at around 1.56.