MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.6 percent to the lowest since Nov. 28, 2022. Japan's Nikkei fell 1.8 percent, while Hong Kong's Hang Seng Index sank 3 percent. Chinese markets were closed for the week because of the Golden Week holiday.

Futures indicated European stocks were due to open lower, with the Eurostoxx 50 futures down 0.58 percent, German DAX futures 0.60 percent lower and FTSE futures down 0.31 percent.

US Federal Reserve officials said monetary policy will need to stay restrictive for "some time" to bring inflation back down to the central bank's 2 percent target.

"I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2 percent in a timely way," Fed Governor Michelle Bowman said Monday in prepared remarks to a banking conference.

Still, the hawkish rhetoric from the Fed officials comes as an ongoing debate over another possible rate hike this year rages on.

Fed funds futures traders are pricing in a 26 percent chance of a rate hike in November, and a 45 percent likelihood of an increase by December, according to the CME Group's Tool.

"We continue on this higher for longer narrative," Rob Carnell, Asia-Pacific head of research at ING. "Higher bond yields, stronger dollar for the moment is the dominant story."

Australia's S&P/ASX 200 index was 1.3 percent lower, while the Australian dollar sank 0.77 percent to $0.631 after the Reserve Bank of Australia held interest rates steady on Tuesday for a fourth month and showed no urgency to hike again.

The central bank, however, repeated a warning that further tightening might be needed to bring inflation to heel in a "reasonable timeframe".

In the foreign exchange market, the focus remains on the Japanese yen as the currency inches closer to the 150 per dollar mark - a level traders have speculated could lead to intervention from the authorities.

The yen was last at 149.89 per dollar in Asian hours, having plumbed a fresh near 12-month low of 149.935 during the session.

Last September, Japanese authorities conducted their first intervention in 24 years, when the yen weakened past 145 per dollar, and speculation has mounted that they will step in again with the yen under constant pressure due to a yawning yield gap against the dollar.

Japanese Finance Minister Shunichi Suzuki said on Tuesday authorities were watching the currency market closely and stood ready to respond, repeating a warning against speculative moves that did not reflect economic fundamentals.

"[It] feels like people have accepted that there is perhaps some genuine intervention coming if they move much higher," said ING's Carnell. "It [the dollar-yen pair] is still nonetheless drifting upwards. Just at a very, very glacial pace."

The dollar index, which measures the US currency against six major rivals, rose 0.168 percent to scale a fresh 10-month peak.

The yield on 10-year Treasury notes was up 0.2 basis points to 4.685 percent after touching 4.703 percent, the highest since October 2007, in the Monday session. The yields got a boost after an agreement to avert a partial US government shutdown reduced demand for the debt before key jobs data this week.

US crude fell 0.84 percent to $88.07 per barrel and Brent was at $89.76, down 1.05 percent on the day.

Meanwhile, spot gold dropped 0.5 percent to $1,818.10 an ounce. US gold futures fell 0.56 percent to $1,819.80 an ounce.