The higher volume of the Nikkei Stock Average meant the dizzying loss of 4,451.28 points was its second-largest fall by percentage, coming in at 12.4 percent to the 14.9 percent drop when the average lost 3,836.48 points on Black Monday.

There were some local factors in Monday's plunge, such as the Bank of Japan raising interest rates from 0.1 percent to 0.25 percent last week, but market analysts told Nikkei Asia the primary cause of the crisis was mounting fear of an outright U.S. recession in the closing days of Joe Biden's troubled presidency:

Foreign investors are selling Japanese stocks due to concerns that the U.S. may be heading for a recession, said Naka Matsuzawa, chief strategist at Nomura Securities. "The fall is not really happening due to Japan-specific reasons," he said. "Markets are still trying to find the bottom."