The short answer is no, this is not time to panic. Markets were hammered overnight in disorderly trading with the US off 3% and Europe off 5%. Intra-day equity volatility was extreme. "Troublesome" parts of the world (China and Greece) saw their equity markets off 8.5% and 10.5% respectively.
We don't see this as a 2008 style global meltdown. The global growth outlook remains 3%+ and low commodity prices will be a boost. Developed world equity valuations are far from extreme. Globally banks have stronger balance sheets - systemic risk to the financial system has not suddenly elevated from 6 months or a year ago.
So why were equities beaten up overnight? Equity markets have had a strong run so a 10% pull back is not a total surprise (easy to say in retrospect but note that many fund managers appear to have increased cash holdings lately). The surprise was more the speed of decline rather than the quantum of decline.
The news is not all bad for equities - we do not think the Fed will raise rates in Sept. We do not think growth and credit issues in China will knock the US economy off course. These are actually positive for equities. Stay the course - this is not a time to panic.