This caused the yen to surge against the dollar, making Japanese stocks and Japanese exports more expensive for foreign investors and buyers.
Fears that the U.S. economy is headed for a recession have also hit UK, European and U.S. stocks.
Jesper Cole, managing director of Monex Group Japan, said he remains confident in Japanese stocks despite Monday's big selloff.
“Japan's fundamentals are strong, there is no risk of recession and corporate leaders are fully committed to increasing capital returns,” he told the BBC.
South Korean stocks also recovered slightly on Tuesday. The Kospi stock index rose 3.5% after falling 8.8% on Tuesday, its worst trading session since the 2008 global financial crisis.
Taiwan's main stock index rose about 3.4% after suffering a record 8.4% drop on Monday.
The news comes after stocks plunged globally on Monday.
Weak jobs data released in the United States on Friday raised concerns about growth in the world's largest economy.
It also fueled speculation about when and how much the Federal Reserve might cut rates.
“Markets are very volatile right now and are likely to remain volatile until the Fed’s decision in September. So we can’t rule out sharp moves in either direction,” said Stephan Angrik, chief economist at Moody’s Analytics.
There are also concerns that stocks of large technology companies, particularly those investing heavily in artificial intelligence (AI), are overvalued and are currently facing difficulties.
Last week, chipmaker Intel announced massive layoffs and disappointing financial results.
There is also speculation that rival Nvidia, one of the main beneficiaries of the boom in demand for AI technology, may delay the launch of its latest product.
