Japanese stocks plunged on Tuesday and other Asian markets declined following heavy Wall Street losses triggered by President Donald Trump's attack on the US central bank.
The Nikkei 225 fell by an unusually wide margin of 4.8 per cent to 19,189.00. The Shanghai Composite Index lost 2.3 per cent to 2,469.28. Benchmarks in Thailand and Taiwan also declined.
Markets in Hong Kong, Australia and South Korea were closed for Christmas.
Wall Street indexes fell more than 2 per cent on Monday after Trump said on Twitter the Federal Reserve was the US economy's 'only problem'.
Efforts by treasury secretary Steven Mnuchin to calm investor fears only seemed to make matters worse.
US stocks are on track for their worst December since 1931 during the Great Depression. Shanghai is down almost 25 per cent this year, while Tokyo, Hong Kong and other markets are on track to end 2018 down more than 10 per cent.
Markets have been roiled by concerns about a slowing global economy, the trade dispute with China and another interest rate increase by the Fed.
Trump's Monday morning tweet heightened fears about the economy being destabilised by a President who wants control over the Fed. Its board members are nominated by the President but make decisions independently of the White House. The board's chairman, Jerome Powell, was nominated by Trump last year.
The Standard & Poor's 500 index slid 2.7 per cent to 2,351.10. The benchmark index is down 19.8 per cent from its peak on September 20, close to the 20 per cent drop that would officially mean the end of the longest bull market for stocks in modern history — a run of nearly 10 years.
The Dow Jones Industrial Average sank 2.9 per cent to 21,792.20. The Nasdaq skidded 2.2 per cent to 6,192.92.
On Sunday, Mnuchin made a round of calls to the heads of the six largest US banks, but the move only raised new concerns about the economy.
Most economists expect US economic growth to slow in 2019, not slide into a full-blown recession. But the President has voiced his anger over the Fed's decision to raise its key short-term rate four times in 2018. That is intended to prevent the economy from overheating.
Technology stocks, healthcare companies and banks took some of the heaviest losses in Monday's sell-off. Wells Fargo slid 3.4 percent, Microsoft 4.2 percent and Johnson & Johnson 4.1 per cent.
US markets reopen on Wednesday.
In energy markets, Brent crude, used to price international oils, lost 9 cents to $50.68 per barrel in London. The contract plummeted $3.33 on Monday to close at $50.77.
In currency trading, the dollar declined to 110.13 yen from Monday's 110.45 yen. The euro advanced to $1.1417 from $1.1405.
