He said he was stupefied by the market's slide - the worst in more than two decades - and pledged to take action instead of focusing on elections.
'Honestly, this for us is beyond our imagination. We have huge fears going ahead,' Mr Aso said, speaking of what he sensed from public opinion.
'We must take measures to seriously deal with this,' he told the legislative budget committee.
The Tokyo Stock Exchange's benchmark Nikkei-225 index plunged 9.38 per cent on Wednesday on a spiralling global financial crisis.
Mr Aso, who took office last month but has had a rocky start, again rejected calls by the opposition to call snap elections.
'From the view of the Japanese people, they are saying, 'Hey, this is no time to hold elections. It's the economy',' Mr Aso said.
The current term of Japan's lower house will expire in September next year, but the opposition hopes voters will vent their anger at Mr Aso's Liberal Democratic Party, which has been in power almost continuously since 1955.
Japan house passes extra budget
Japan's lower house on Wednesday approved an US$18 billion (S$27 billion) emergency budget to stimulate Asia's largest economy as fresh turmoil battered Tokyo financial markets.
Prime Minister Taro Aso's ruling coalition passed the budget through the lower house with the rare support of the opposition, which is seeking early elections by speeding up parliamentary debates.
The opposition-dominated upper house will begin debate on the budget on Thursday ahead of a final approval, which is expected to be made in about a week.
Chief government spokesman Takeo Kawamura said that Japanese leaders were already studying more relief measures.
'The ruling coalition has already started studying measures to take after watching the plunge in share prices, the world's financial crisis and the Japanese yen going above the 100-yen level against the dollar,' he said.
The yen soared past the psychological barrier on Wednesday for the first time in six months as investors exited risky investments. -- AFP