Australia's share market has joined Wall Street in a correction, falling more than 10 per cent since their recent record highs, while the Australian dollar plumbed a fresh 11-year low.

Key points: The benchmark Australian ASX 200 share index closed down 3.25 per cent

The benchmark Australian ASX 200 share index closed down 3.25 per cent ASX has had a 10 per cent "correction" in the space of just a week — the biggest weekly decline since the global financial crisis

ASX has had a 10 per cent "correction" in the space of just a week — the biggest weekly decline since the global financial crisis The value of listed companies in Australia is down more than $240 billion from record highs last Thursday

In the space of just a week, the ASX 200 has gone from a record closing high of 7,162 last Thursday to a low of 6,427 in today's session.

At the close, the ASX 200 was down 3.25 per cent at 6,441 taking the losses to more than 10 per cent since that record, marking the beginning of what traders call a "correction".

To enter a "crash" or "bear market" share prices will need to lose another 10 per cent from there.

Looking at the broader market, represented by the All Ordinaries index, Australian shares have lost more than $240 billion in value since their highs last week.

It is the biggest weekly drop for both Australian and US share markets since October 2008, during the peak of the global financial crisis market chaos.

The Australian dollar has also again plumbed financial crisis depths, falling to a fresh 11-year low of 65.17 US cents during afternoon trade.

At various points during the session the market has attempted to bounce back, however percentage falls since the open remained in the high-2 to low-3 per cent range as buyers have been in short supply.

All sectors of the market finished in the red, but technology, mining, industrial and energy stocks were the worst hit.

The biggest falls among the top 200 companies were Harvey Norman (-14.1 per cent), Gold Road Resources (-14 per cent) and Clinuvel Pharmaceuticals (-10.8 per cent).

A late surge in some firms left 10 out of the top 200 companies in the black by the end of the day.

'The direction ahead for the economy is straight down'

Wall Street's main indexes plunged more than 4 per cent overnight Thursday, their worst trading session since 2011.

The major share indices have slumped more than 12 per cent from recent highs confirming US shares are deep into a correction and potentially heading for a bear market.

Global shares are now at a four-month low, having retreated from record highs at a rapid pace.

The indexes have been hit by their steepest weekly pullback since the 2008 global financial crisis, as new coronavirus infections reported around the world surpassed those in mainland China.

While shares are falling, demand for government bonds is at record highs, pushing interest rates on them to record lows.

The yield on 10-year Australian Government bonds was just 0.82 per cent, while returns on 10-year US Treasuries were below 1.25 per cent.

"Stocks and bonds say we're doomed," Chris Rupkey, the chief financial economist for MUFG Union Bank, told Bloomberg.

"Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down."

OANDA's senior market analyst for the Asia-Pacific region, Jeffrey Halley, said that while much remains unknown, traders have finally begun to appreciate the scale of global economic disruption that is imminent.

"What is clear, is the potential supply and demand shock that may be about to sweep the global economy," he warned in a note.

"That likely justifies the equity sell-off of this week with a harsh reassessment of delusional valuations in some cases."

Mr Halley said that while central bank rate cuts and money printing may help somewhat on the demand side, they would do nothing to avert disruptions to the supply of goods and services.

"If global supply chains start freezing up, due to a lack of materials or credit, or both, no amount of rate-cutting will unlock that," he argued.

"If SME's [small to medium enterprises] can't get paid for their invoices, or pay theirs, or secure raw materials, or transport goods, the net effect is shuttered businesses and job losses."

'It's becoming more global'

CommSec market analyst Steven Daghlian said that the falls have been exacerbated because markets were previously so exuberant.

"We had quite a strong start to 2020, and 2019 was actually the best year for the share market in a decade when we were up about 20 per cent, so we are coming off those high levels and that perhaps is making these losses worse than they would've been otherwise," he told ABC News.

"This is obviously a very different situation than the global financial crisis and back in October 2008 … the Aussie market fell in the order of 15.5 per cent in one week."

US traders were particularly rattled by the Centres for Disease Control and Prevention confirming a COVID-19 infection in California in a person who apparently had no relevant travel history or exposure to another known patient.

"It's not a China thing, it's becoming more global … in terms of the spread of the virus and its economic impact," Willie Delwiche, investment strategist at Robert W Baird in Milwaukee told Reuters.

"There's a lot of uncertainty right now about where that impact lands … it's also possible that forecasts are over-reacting to the downside."

'We haven't yet hit peak panic'

However, AMP Capital portfolio manager Dermot Ryan said that there is likely to be further panic and downside before markets settle down.

"As so far this has all been driven by offshore infection rates, further escalations over the weekend may see another leg down next week," he wrote in a note.

"We think the market is late reacting to coronavirus which has been spreading across borders for over a week.

"We haven't yet hit peak panic and there may be another leg down for markets."

Mr Ryan said the spread of coronavirus through Europe and North America will cause further stress on markets, as will the increasingly likely declaration of a pandemic, which he expects from the World Health Organisation (WHO) this weekend.

However, he said the market mayhem also presented opportunities for calm investors.

"Bottom line is we are probably not at peak panic yet, but investors should start thinking about what they would like to add to their portfolios as opportunities present themselves," Mr Ryan added.

By the close, both the S&P 500 and Dow Jones Industrial Average had slumped 4.4 per cent, while the tech-heavy Nasdaq fell even further, plunging by 4.6 per cent.

European markets had also dropped sharply earlier in the session, with the EuroStoxx 50 off 3.4 per cent and London's FTSE 100 down 3.5 per cent.