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Shares in Japan fell sharply early Tuesday morning as investors worried about the spread of the coronavirus.
Japan’s Nikkei 225 index dropped 4.5% when it re-opened following a public holiday on Monday, but has since regained some ground.
Shares in Toyota Motor Corp were down 2.85%, while Uniqlo’s parent company Fast Retailing dropped 4%.
Both firms are highly-dependent on a global supply chain that faces disruption following the shutdown of Chinese factories.
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 less than 1%.
Many analysts expect the spread of the coronavirus to peak in the first quarter of this year 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 .