Shares in Japan fell as much as 4.5% on Tuesday morning as investors worried about the spread of the coronavirus.
The slump followed a global stock market plunge on Monday with Wall Street and London suffering big drops.
Japan’s Nikkei 225 index dropped sharply when it re-opened following a public holiday.
Overnight, Wall Street saw its sharpest daily declines since 2018, with the Dow Jones falling 3.5%.
Shares across Asia’s other major stock markets traded cautiously on Tuesday morning.
Hong Kong’s Hang Seng index dipped slightly, while South Korea’s Kospi edged up.
But many analysts still expect the spread of the coronavirus to peak in the first quarter with a rebound in the second quarter.
“Those who expect the virus to kick off a global recession might be disappointed, as the impact is likely to be temporary,” said Margaret Yang, an analyst with CMC Markets. “Central banks around the globe are ready to inject liquidity and cut down interest rates to cushion the headwind.”
She added that the coronavirus is proving to be less deadly than SARS, just more contagious.
In China, the Shanghai Composite index was down nearly 1% amid mixed reports about efforts to contain the virus.
Investors remain worried about how far the coronavirus will spread rapidly outside of China, with raised fears of a prolonged global economic slowdown .
Japan saw a spike in cases last week to 773, mostly linked to patients from a cruise ship that had been under quarantine near Tokyo.
South Korea had reported a surge in cases in the past week centred in the city of Daegu with airlines suspending flights to the city.