The "fiscal cliff" measures - cutting spending and increasing taxes dramatically - came into effect automatically at midnight on Monday when George W Bush-era tax cuts expired.
In the U.S., uncertainty over the near-term, with a looming fiscal cliff and the potentially nefarious effect of a new debt ceiling debate still to come, have kept investors on edge.
The spending reductions were to have taken effect on January 1, but the year-end fiscal cliff negotiations kicked the can down the right, delaying the cuts two months in hopes that an agreement could be reached.
The tax increases were part of a package agreed between Republicans and Democrats in Congress on the eve of the "fiscal cliff" - a far more draconian set of tax rises and spending cuts that had been due to take effect on 1 January, had no deal been reached.