Anxious investors in Tokyo sent shares into a free-fall, with the benchmark Nikkei 225 stock average plunging 9.4 percent - its biggest drop in 21 years - to 9,203.32, a five-year low.
"Selling on Wall Street triggered further selling in Tokyo.
It's like a chain reaction," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. Ltd. "No one knows the bottom of the ongoing financial crisis, and investors were really spooked by growing uncertainty over the global credit crisis."
Accelerating the pessimism were doubts that finance ministers and central bankers from the Group of Seven nations would unveil any effective measures at their meeting in Washington Friday.
Indonesian authorities shut down trading for the day on the country's exchange after the key index plunged more than 10 percent, driven by huge losses in commodities stocks. Investors dismissed comments by the central bank governor Tuesday that Indonesia will avoid the worst of the global credit crisis. They also reacted negatively to a quarter-point rate hike announced Tuesday to rein in inflation.
"What is happening is panic selling to an extent that it is irrational," said Irvin Patmadiwiria, the head of investments at PT Lautan Dana Investment Management in Jakarta.
Hong Kong's de factor central bank said it would slash its benchmark interest rate by 1 percentage point to 2.5 percent to help ease the credit crunch.
The move by the Hong Kong Monetary Authority, effective Thursday, is a break from the territory's traditional pattern of closely tracking the U.S. Federal Funds target rate, now at 2 percent. The HKMA revised its formula for calculating its base rate from 150 basis points above the prevailing U.S. fed funds rate to 50 basis points.
"One has to do extraordinary things at extraordinary moments," said Jacky Choi, a Hong Kong-based fund manager at Value Partners Ltd., which manages about $5 billion in Asia.
Russian news agencies say Moscow's MICEX stock exchange, where most of Russia's trading takes place, has shut until Friday after losing more than 14 percent in the first half-hour of trading Wednesday.
It was a brutal day across Asia.
Hong Kong's blue chip Hang Seng index shed 5.2 percent, and India's Sensex sank 4.3 percent. Seoul's Kospi lost 5.8 percent, Taiwan's key index fell 5.8 percent, and Singapore's benchmark tumbled 5.5 percent.
Australia's benchmark S&P/ASX200 closed down 5 percent, wiping out gains Tuesday after the country's central bank cut its key interest rate by a bigger-than-expected 1 percentage point.
"People are very, very nervous that Europe will get belted tonight as they didn't see a lot of the late losses in the U.S.
session, and people just think it's going to get worse," said Ric Klusman, an institutional dealer with Aequs Securities in Sydney.
In New York Tuesday, the Dow lost more than 5 percent despite efforts by the Federal Reserve to reinvigorate the dormant credit markets by invoking emergency powers to lend money to companies outside the financial sector and buy up mounds of commercial paper, the short-term debt that firms use to pay for everyday expenses like salaries and supplies.
Federal Reserve Chairman Ben Bernanke warned in a speech Tuesday that the financial crisis could prolong the difficulty the economy is facing. While his remarks were widely regarded as a sign that an interest rate cut could be in the offing, Wall Street appeared little comforted and focused on his downbeat assessment.
The downturn bodes ill for major Asian exporters dependent on the U.S. for a big chunk of their business.
Shares of Toyota Motor Corp. plunged 11.6 percent Wednesday, as investors recoiled on reports that operating profit at Japan's top automaker would fall 40 percent this fiscal year through March.
The automaker's operating profit is expected to total about 1.3 trillion yen ($12.8 billion), short of the 1.6 trillion yen forecast ($15.8 billion), according to the Nikkei financial daily.
It may also miss its global sales target of 9.5 million units this year, the paper said.
Other Japanese carmakers were also dragged down on the news, as well as a wilting dollar. Honda Motor Co. lost 10.3 percent, and Nissan Motor Co. was off 9.9 percent.
In currencies, the dollar briefly fell below 100 yen for the first time in six months. It sank as low as 99.58 yen and was trading at 100.45 yen Wednesday afternoon in Asia. The euro gained to $1.3652 compared with $1.3550.
