The U.S. Federal Reserve's decision not to raise its key interest rate upset markets from Japan to Germany on Friday.
Across Europe, stock markets were declining and Germany's DAX index led the way with a fall of nearly 2%.
Mike van Dulken, head of research at Accendo Markets, said investors are feeling uneasy after the Fed highlighted "concerns about external factors such as China, market volatility and deflation derailing a [U.S.] recovery."
In Asia, Japan's Nikkei shed 2%. Indexes in Australia, Hong Kong, and Shanghai were more resilient, posting modest gains.
The U.S. dollar, meanwhile, lost ground against currencies in Asia, especially the Japanese yen.
Gold prices were up around 1.6% at $1,135 an ounce.
The Fed's key rate has been stuck near zero since the depths of the financial crisis, and it's been nearly a decade since the central bank raised rates.
Related: Federal Reserve leaves rates near 0%
Rates will go up -- the question is when? The U.S. economy is relatively strong compared to its peers, but a global economic slowdown, low inflation in the U.S. and volatile stock markets encouraged the Fed to once again punt on raising rates.
"The situation abroad bears close watching," Fed chair Janet Yellen said at a press conference Thursday. "Heightened concerns about growth in China and other emerging market economies have led to notable volatility in financial markets."
Related: The Fed did nothing. Now what?
Investors in emerging markets are paying particularly close attention to the Fed.
In 2013, when former Fed Chair Ben Bernanke signaled that the bank would eventually end its stimulus program, emerging markets had a "taper tantrum."
The dollar's surge, like rising interest rates, makes it harder for emerging nations and businesses to pay off their debt. And emerging economies' engine of growth -- commodities like oil, copper and soy -- have fallen off a cliff in the past year.
The major concern is that all these factors could cause cash to flood out of emerging markets and companies.
