In Europe the FTSE shed 1%, whilst the CAC (-1.8%) and DAX (-2.3%) were hit even harder.
The losses accelerated in the US, with the Dow slumping 266 points (-2.2%) to lock in an eighth straight losing session.
The broader S&P 500 gave up 2.6% and the tech-heavy Nasdaq lost 2.8%. Last night’s losing session puts US stocks on pace for their longest losing streak in nearly two years.
The Senate approval of the debt deal was almost forgotten in the midst of fresh signs that the economy is in real trouble.
Data showed that Americans cut spending by the most in nearly two years and saved at a faster rate during June, underscoring the economy’s inherent weakness.
Amidst the firestorm investors sought safe-haven refuge in gold and the Swiss franc, with the former surging to yet another record high of $1661.90 an ounce.
The US dollar index, which tracks the currency against those of six major trading partners, rose 0.3%.
Elsewhere, the Aussie dollar slid 1.6% versus the greenback and the yen after the RBA kept its benchmark interest rate unchanged yesterday.
Today’s session will bring us important data in the form of retail sales and the trade balance, both slated for release at 11:30am, AEST.