Global markets were slammed overnight, with US bond yields spiking amid heightened fears over the US debt ceiling.

The losses followed a press conference from President Obama, who warned there will be a cloud over US credibility until the budget standoff is resolved, and that he would not be held to ransom over the debt ceiling.

Investors received another kick in the guts from an IMF report downgrading 2013 growth forecasts for emerging market economies.

Short term bonds were also sold off heavily amid fears a failure to raise the debt ceiling will damage the creditworthiness of the United States. The Dow slumped 159 points (-1.1%) to 14777, the S&P500 shed 21 points (-1.3%) to 1655 and the Nasdaq tumbled 75 points (-2%) to 3695.

The losses weren't as severe in commodity markets. Oil managed a modest gain ahead of tonight's supply report, which is expected to reveal only a small gain in weekly US crude inventories.

Bullion futures slipped 0.1% to US$1325 an ounce.

The US dollar rebounded slightly versus its main counterparts, although the greenback is looking decidedly shaky against the yen as the US shutdown entered an eighth day.

In economic news, the Westpac Consumer Sentiment Survey is due for release at 10:30am, AEDT.

Morning Market Update: Selloff Continues is a post from: Australian Stock Report Market Pulse Blog