"At this point, we know the implications of Brexit are negative for global markets, but absent a full understanding of what the exit will look like, markets are embracing a risk-off mentality and you're seeing that play out across the globe," said David Levy, portfolio manager at Republic Wealth Advisors.
Before European markets had opened, Britain's finance minister, George Osborne, had sought to reassure Britain and its international partners that the country "is ready to confront what the future holds for us from a position of strength".
Standard & Poor's stripped Britain of its coveted 'AAA' top rating, lowering it by two notches, and Fitch downgraded it a notch to 'AA'.
"The uncertainty generated from a lack of a functioning government in the UK, the lack of a roadmap of a new deal for the UK after its exit from the EU and the lack of clarity around the continuation of the British Union likely will weigh on investment into the UK," Nomura said.
The Brexit is expected to force large US banks to make costly changes to their European operations, which have been headquartered in London.