United States President Barack Obama had little time to celebrate winning a second term as US markets turned red and attention turned from the election to looming economic problems.
A relief rally was nowhere in sight as US stocks fell more than 2% putting the Standard and Poor's 500 on track for its biggest drop since June.
Energy, healthcare and the banking sectors were among the hardest hit after Mr Obama defeated Republican Mitt Romney, whose policy positions favoured those industries. Defence shares also plunged.
Both the Dow and Standard and Poor's closed at their lowest levels since August.
Craigs Investment Partners broker Chris Timms said the markets were concerned about the looming showdown between Mr Obama and a divided Congress on how to deal with the fiscal cliff - the $US600 billion ($NZ724 billion) package that automatically triggers on January 1 if no deal is reached.
The fiscal cliff is a mixture of tax increases and budget cuts.
"There is also the issue of a debt ceiling, which needs to be raised to avoid a government shutdown," he said.
The Republican Party retained control of the House of Representatives while the Senate remained under Democratic control.
Mr Timms said the divided government was disappointing because the same configuration had contributed to an existing deadlock. The latest result had provided no clear path to a resolution.
The transtasman sharemarkets did not follow the lead of US and European stocks. Mr Timms said the ASX and NZX had shrugged off much of the negative talk from Europe and the US.
"The NZX was up slightly as the neverending search for investment income continues," he said.
Overseas, the market losses were broad with pessimism exacerbated by overseas concerns after the European Commission said the region would barely grow next year, dashing hopes for improvement in the short term.
"There's no question that Europe is lagging the rest of the developed and emerging world," he said.
Asian stocks opened down on the US and European concerns.
Greece's Parliament narrowly voted to approve an austerity package to unlock vital aid and avert bankruptcy, despite internal rifts in both ruling New Democracy and Pasok parties and violent demonstrations.
"The Greek vote is gone by, the flash Obama panic has forced ... investors to close down their positions to lock in profits," Societe Generale analyst Sebastien Galy said in a note to clients.
"We are left with the usual story of flatter US Treasuries helped by renewed reserve activity."
The European Central Bank was expected to keep interest rates unchanged overnight.