The FTSE, CAC and DAX all lost more than 1.2% in Europe, whilst in the US the losses were even more pronounced.
The Dow shed 199 points (-1.6%) whilst the broader S&P dumped 27 points (-2%) and the tech-heavy Nasdaq slumped 75 points (-2.7%).
Positive sentiment was sucked out of the market amid the ongoing debt ceiling negotiations and more signs of a deteriorating economy.
With confidence in the political system fading the hits kept on coming with durable goods orders falling 2.1% in June.
A note from a prominent US analyst suggesting that investors shed all positions in the stock market also weighed heavily on the market’s mind.
It was the fourth consecutive losing session for US markets and puts the Dow on pace for its worst weekly decline in nearly a year.
Amid falling equity markets, the greenback advanced from its lowest level since May against the currency’s six major US trading partners.
Commodity markets also lost ground overnight, with crude falling more than 2% on the back of the bad durable goods numbers.
Copper shed 0.7% whilst not even safe-haven gold was spared with the precious metal closing 0.1% lower.
In company news, Macquarie Group is holding its AGM this morning. The embattled investment bank has advised it expects its first half of FY12 to be lower than a year earlier.
Looking to the miners, and a week of worker strikes has forced BHP and RIO to declare force majeure at their Escondida mine, the world’s largest copper mine.
There is no major local data due out during today’s session.