0241 GMT July 21, 2019
Japan's Nikkei plummeted 5 percent on Tuesday, dragging it down to its lowest level in 20 months. In China, the Shanghai Composite dropped as much as 2.5 percent before recovering some of its losses to close down 0.9 percent.
The declines in Asia followed another brutal day for US stock markets, which fell more than 2 percent in a shortened trading session. The Dow, which sank 2.9 percent, and the S&P 500, which lost 2.7 percent, suffered their biggest Christmas Eve declines ever, according to CNN.
"The market is getting pummeled from every direction," said Stephen Innes, head of Asia-Pacific trading for online broker Oanda.
Investors are getting increasingly concerned about a slowdown in global economic growth, according to market experts. Those worries have been intensified by US President Donald Trump's attacks on Federal Reserve Chairman Jerome Powell for continuing to raise interest rates.
US stocks went into a tailspin Monday after Trump tweeted that "the only problem our economy has is the Fed," stoking fears he may fire Powell.
The turmoil on Wall Street is infecting other big markets because of concerns that problems in the US economy — the world's biggest — could hit major trading partners such as Japan and weigh on companies' profits, said Hirokazu Kabeya, chief global strategist at Daiwa Securities in Tokyo.
Investors around the world already have plenty to worry about, including China's economic slowdown, the unresolved US-China trade war and Brexit's unpredictable outcome.
Despite strong growth this year, the US economy has become a wild card in recent weeks as investors have fretted about the combination of slowing growth and rising interest rates. US stocks are on pace for their worst December since the Great Depression.
US Treasury Secretary Steven Mnuchin added to the uncertainty on Sunday by releasing an unusual statement saying he had called the CEOs of the biggest American banks. He said the executives assured him their banks are healthy and have ‘ample liquidity’ to lend to consumers and businesses.
"Markets continue to function properly," Mnuchin said.
The use of words typically reserved for times of crisis — even though there were no outward signs of one — spooked investors.
"This is the type of announcement that raises the question of whether Treasury sees problems that the rest of the market is missing," Cowen & Co. analyst Jaret Seiberg wrote in a note to clients.
The partial US government shutdown has added to the sense of disarray.
Multiple major stock markets in the Asia-Pacific region were closed Tuesday for Christmas, including Hong Kong, Australia and South Korea. Most European markets are also shut, while US markets are due to reopen on Wednesday.
Kabeya said he's skeptical investors' downbeat mood will improve before the end of the year.