The dollar took a beating, as the euro broke above $1.11 to levels not seen since Trump's election win in November, while the yen was also piling pressure on the U.S. unit.
The Dow Jones Industrial Average was down 372.82 points, or 1.78 percent, to end at 20,606.93, the S&P 500index lost 43.64 points, or 1.82 percent, to 2,357.03 and the Nasdaq Composite dropped 158.63 points, or 2.57 percent, to 6,011.24.
In early European trade, London dropped 0.3 percent and Paris was flat while Frankfurt gave up 0.1 percent. The S&P 500 financial sector tumbled 3 percent.
President Donald Trump, striking a defiant tone on Thursday after days of political tumult, denied colluding with Russian Federation during his 2016 campaign or asking former FBI Director James Comey to drop a probe into his former national security adviser.
The euro hit a six-month high of $1.1174 and last stood at $1.1143, down 0.1 percent on the day.
Several money managers said they were not yet likely to change their portfolios as a result of the latest White House news.
The dollar has borne much of the fallout from the Trump disclosures.
The dollar index, which tracks the value of the currency against a basket of currencies, is down 0.6% to 97.5, its weakest since November. The U.S. dollar fell to 0.9785 Swiss franc from 0.9853 Swiss franc, and it edged up to 1.3635 Canadian dollars from 1.3580 Canadian dollars. In fact, the broadest index of Asia-Pacific shares outside Japan- MSCI's broadest index reduced by 0.3 percent and Japan's own index Nikkei i.e. N225 declined by 0.5 percent. "That is going to be easier said than done, it appears, with US production running at its fastest pace since August 2015 and data yesterday confirming that Chinese growth momentum continues to moderate", ANZ strategists wrote in a daily note.
Currently, the yen has increased by 0.7% to 112.26 yen per dollar, this figure tramples May 5's exceptional increase. Elsewhere in Europe, thin trading and the murky USA political outlook dragged down stocks, with the Paris CAC shedding 0.5 percent and Frankfurt's DAX down 0.4 percent.
"We've seen the Trump agenda derailed and try to get back on track several times".
Asian equity markets were broadly lower, extending a selloff in the US overnight, as doubts increased that the Trump administration would be able to deliver on its policy goals due to mounting political problems.
London fell 0.3 per cent, performing better than its eurozone peers on the back of figures showing that Britain's unemployment rate had fallen to a 32-year low, but economists anxious about slow wage growth. We are already well positioned, but we need to think about a more negative scenario re tax reform versus what we were previously thinking", said Edward Perkin, chief equity investment officer at Eaton Vance (NYSE: "EV - news).
U.S. Treasury yields fell, with benchmark 10-year notes up 23/32 in price to yield 2.25 percent, the lowest level since April.
In commodities, oil prices were little changed after settling at a two-week high overnight after United States crude inventories declined for the sixth straight week.
Switzerland's safe-haven franc hit its highest since November's US election and Britain's Brexit-bruised pound broke through the $1.30 barrier for the first time since late September after reassuring retail sales figures.
Spot gold dropped 0.5 percent to $1,254.10 an ounce.
The Swiss franc and Japanese yen, currencies considered safe haven investments during times of uncertainty, surrendered gains against the greenback after the release of USA initial jobless claims and the Philadelphia Federal Reserve's Business Index.