Share prices in mainland China traded slightly upwards overnight with the Shanghai index likely to close just under 1% higher, reflecting similar modest gains on Wall Street last night.

Nearly all market commentators are predicting significant volatility or price changes over the period ahead, but there are different views this morning as to how investors should react.

According to Goldman Sachs, the China-led downturn in global stock prices may continue and if so, investors should turn back to equities, particularly European shares which have higher earnings and growth prospects.

In a very gloomy warning last night, RBS bank’s Head of Credit, Andrew Roberts, advised institutional clients to brace for a "cataclysmic year" and to sell everything except high-quality bonds.

“Sell everything except high-quality bonds. This is about the return of capital, not return on capital. In a crowded hall, exit doors are small,” the leading RBS official said. 

He forecasts that European stock prices could fall by 10% and those in the US by 20% while oil prices could fall well below $20 per barrel.

He added that there are "a number of bad headwinds affecting the world right now, which will worsen in 2016."

Morgan Stanley has also warned that the oil market has entered "uncharted territory," and that it is possible that the price of a barrel of oil will move towards $20.