Here’s What Is Different About This Market Sell-Off

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The fact that the current sell-off in stock markets is not driven by fears of a slump in the global economy is significant and marks it out from other bouts of volatility seen in the past three years, strategists say.

Concerns that the U.S. Federal Reserve could start unwinding its massive monetary stimulus program later this year sent equity markets into a tailspin last week, with the heightened volatility extending into a new week as Asian markets opened lower on Monday.

(Read More: A Too Strong U.S. Economy? What Everyone's Watching)

The S&P 500 last week suffered its biggest three-day drop in over a month, Japan's Nikkei stock index tumbled as much as 4 percent in early trade on Monday, extending last week's fall of more than 3 percent and European shares on Friday fell to their lowest level in about three weeks.

"It's worth noting that the correction over the last week was very different to the global growth scares seen around mid-2010, 2011 and 2012. This time around there hasn't been a peep out of Europe and bond yields rose over the last week rather than fell as in the last three years," said Shane Oliver, chief economist at AMP Capital in Sydney, referring to safe-haven bonds that tend to benefit when investors shun risk assets such as equities.

In recent years, European markets in particular have been hit hard by heightened volatility globally or been the source of that volatility as was the case last July when worries about Spain's finances sparked concern about the euro zone's future.

"In other words, this time around it's more about nervousness as to when the Fed [U.S. Federal Reserve] might change direction and not about a possible slump in global growth," Oliver added.

So the fact that the outlook for the global economy is better than it was six months, albeit not stellar, means the outlook for equities overall remains positive, analysts said.

In fact, it's some signs of improvement in the U.S. economy and recent comments from Fed officials that have sparked talk of an early end to quantitative easing.

And data this week are expected to show signs of improvement in Japan's economy, where there has been a concerted effort to revive growth.

(Read More: Data to Show Signs of Life in Japan's Economy)

Equity markets have been on a strong upward path since the start of the year and many market watchers say the pull-back or correction in stocks is to be expected and will be more pronounced in markets such as Japan, the best performing global equity market.

The Nikkei is down almost 11 percent from a five-year high hit last Thursday, knocking its year-to-date gains down to around 36 percent. The S&P 500, a broad measure of U.S. stocks, has tumbled 2.5 percent from a record high hit last week.

(Read More: Japan Bulls Unwavered by Stock Market Rout)

"I believe that equity markets after a period of volatility - which arguably we are going through right now - globally will be higher at the end of the year than where we are today," Bob Parker, a senior advisor at Credit Suisse told CNBC Asia's "Squawk Box."

"Part of the reason for that is that the money markets, fixed income markets are unattractive relative to equity markets," he added.

Bart Van Ark, an executive director at the Conference Board shared that view. "To me this is a correction, it is a healthy development in line with the global economic outlook with is ok but not great and therefore these markets needed to be adjusted and they now have an upside potential for the second half of the year," he told CNBC.

- By CNBC.Com's Dhara Ranasinghe; follow her on Twitter @DharaCNBC