On Tuesday, Chinese authorities confirmed a fourth death in an ongoing coronavirus outbreak in the country, bringing the total number of confirmed coronavirus cases to above 200.
China has confirmed that the virus, which causes breathing difficulty, can be transmitted from human to human.
The fears across the country were particularly acute given the threat of contagion as hundreds of millions travel for the forthcoming lunar new year holiday, when up to 400 million are expected to be on the move across China.
Outside China, cases have also been confirmed in Thailand, Japan and South Korea, according to the Centers for Disease Control and Prevention.
The mood swing saw MSCI's (NYSE: MSCI) broadest index of Asia-Pacific shares outside Japan slip 1% after a steady start. Hong Kong, which suffered badly during the Sars outbreak, saw its index fall 2%.
Other Asian markets also reacted poorly to the development, with China's CSI 300 index 000300, -1.71% closing 1.7% lower, while Hong Kong's Hang Seng stock index HSI, -2.81% slumped 2.8%.
Gold (NYSE: GLD) futures on Tuesday traded lower, facing pressure as China, one of the commodity's biggest buyers, faced a viral outbreak that could hurt buying of physical gold at a peak holiday period.
Travel-related stocks in Asia also fell on Tuesday amid growing fears surrounding an outbreak of this mysterious virus.
Airline stocks across the region took a hit. Hong Kong-listed shares of China Eastern Airlines (NYSE: CEA) and China Southern Airlines (NYSE: ZNH) dropped 6.7% and 6.51%, respectively, and Cathay Pacific (OTC: CPCAY) plummeted 4.07%. Elsewhere, Japan Airlines (OTC: JAPSY) slipped 2.97% in Japan while ANA shed 2.16%. Australia's Qantas (OTC: QUBSF) fell 1.7%.
In Hong Kong, shares of insurers tumbled as AIA fell 3.42%. Hong Kong-listed shares of Ping An (OTC: PNGAY) and China Life Insurance (NYSE: LFC) also dropped 4.31% and 4.95%, respectively. Stocks of casino operators also fell, with Wynn Macau (OTC: WYNMF) plunging 4.81% and Melco International Development (OTC: MEVF) diving 4.35%.