Tokyo's Nikkei stock index fell 3.9% in its opening minutes of trading Tuesday morning, hours after the U.S. stock market suffered its biggest one-day drop in years.

World markets have been in decline this week, as S&P's Friday downgrade of the United States' credit rating continues to ricochet. The Nikkei (N225) index ended Monday trading down 2.2%, and fell further at Tuesday's open. The index shed 347 points in its first half-hour of trading, dropping to 8,750.10.

It was the first time since mid-March that the Nikkei sank below 9,000. In Australia, the All Ordinaries index also opened lower, declining 4% in early Tuesday trading.

The moves follow a day in which the three major U.S. stock indexes sank between 5% and 7% each, pushing the Dow (INDU) below 11,000 for the first time since last November.

"Investors are having one reaction to the downgrade: sell first and ask questions later," said Paul Zemsky, head of asset allocation with ING Investment Management.

The ripple effects of S&P's downgrade are only starting to be felt. The credit agency downgraded mortgage giants Fannie Mae and Freddie Mac on Monday as well as dozens of U.S. cities, insurance companies and other entities with financial ties to the U.S.' credit rating. More downgrades are expected through the week.