Shares, oil and the US dollar were all under pressure as global financial markets took fright at the prospect that Donald Trump would fail to deliver on his growth-boosting promises.

In the most nervous conditions since the immediate aftermath of the president’s shock victory in last November’s elections, stock markets in Asia and Europe fell in response to Tuesday’s sharp decline on Wall Street.

The biggest fall in US shares in five months prompted declines in Tokyo, Frankfurt, Paris and London, which in turn ensured another jittery opening in New York. In the City, the FTSE 100 closed 54 points lower at 7,324.72.

Markets have become increasingly impatient with the new Trump administration for failing to follow through on pledges to use a package of tax cuts and infrastructure spending to raise the US growth rate.

Share prices have risen steadily since Trump defeated Hillary Clinton in last November’s race for the White House amid optimism that the US could be on the point of breaking out of the low-growth path evident since the world’s biggest economy emerged from recession almost eight years ago.

But sentiment has turned this week after it became clear that there is likely to be a protracted delay before the Trump administration can get tax cuts through Congress. Investors believe a failure to secure agreement on Capitol Hill to repeal Barack Obama’s healthcare act – the new administration’s first legislative test – will lead to a further sell-off on Wall Street.

On the foreign exchanges, money flowed out of the dollar and into the safe haven of the Japanese yen. Sterling rose to stand at just under $1.25 against the US currency.

News of an increase in US oil stocks led to a fresh drop in the cost of crude, already under downward pressure on concerns that an Opec deal to curb production has started to unravel. A barrel of Brent crude was changing hands at less than $50 a barrel and is down 11% since the start of March.

Jasper Lawler, a senior market analyst at London Capital Group, said: “It’s overly simplistic to lay the blame for the market decline at Donald Trump’s door. The first US rate hike this year, a slump in oil prices, the future of quantitative easing under higher inflation and end of quarter portfolio manoeuvring have played a part in markets changing course. Still, the Trump presidency, which has played such a large role in the rise in markets since November, is not to be ignored as a factor.”

Lawler added that what had been seen as the two biggest contributors to the idea that the world was reflating – a Trump-led fiscal boost and rising oil prices – had come unstuck in the past fortnight. The “repeal and replace” of Obamacare was being seen as an acid test of whether Trump could deliver on his fiscal plans and the difficulties encountered were a “bad omen” for tax reform.