Australian shares have made a huge turnaround despite global markets tumbling again overnight over US President Donald Trump's coronavirus-driven ban on European travellers.

The ASX 200 surged 4.4 per cent to 5,539 points during the final moments of an incredibly volatile session.

For most of the day, investors were panic selling, which drove the benchmark index sharply lower (-8.1 per cent).

But about 2:25pm AEDT, the market began to rebound — and finally turned positive within an hour.

Investors piled back into the share market shortly before Prime Minister Scott Morrison urged all Australians, on Friday afternoon, to suspend all non-essential gatherings of more than 500 people from next week.

Furthermore, local investors looked ahead to Wall Street's next trading session and how it was likely to perform.

Dow Jones futures jumped by 617 points, suggesting the US market would rebound sharply when it re-opened.

Nevertheless, the local share market has shed 22.7 per cent of its value in the last three weeks and remains firmly in bear-market territory.

About half of those losses (10.9pc) occurred this week alone amid the World Health Organisation declaring the coronavirus a pandemic, and a collapse in oil prices due to Saudi Arabia and Russia entering a price war.

"We're starting to get a sense of how dire the impact on the economy is going to be," Liz Ann Sonders, chief strategist at investment firm Charles Schwab, said.

"Each day the news doesn't get better, it gets worse."

This was the most volatile session since the global financial crisis, as measured by the S&P volatility index (VIX)

The VIX skyrocketed by 84.2 per cent to 42.3 points. It has not been at these levels since November 2008.

Travel ban spooks investors

The Australian dollar plunged by 4 per cent to a 17-year low early on Friday morning.

It fell as low as 62.16 US cents, before lifting back to 63.2 cents.

The local share and currency markets initially sank after Mr Trump imposed a ban on European travellers from entering the United States, as global authorities struggle to deal with the coronavirus pandemic.

It also came after European markets had their worst session ever, and Wall Street's Dow Jones index fell 2,353 points (or 10 per cent) to 21,201 overnight.

That makes it the Dow's worst single-day drop since the Black Monday crash in October 1987, when it shed more than 22 per cent.

ANZ said markets were also spooked by Mr Trump's lack of a meaningful fiscal package to ease the pain of the economic impact of the coronavirus.

"[Mr] Trump suggested a few days ago that a very large package was on the way, but has so far not delivered," it said in an economics note.

The best-performing stocks included Cochlear (+21pc), Oil Search (+17.2pc), Fortescue Metals (+13pc), CSL (+11.9pc).

Meanwhile, the worst performers were gold producers such as Northern Star Resources (-8.1pc) and St Barbara (-7.5pc).

RBA pumps extra cash

Meanwhile, the Reserve Bank injected an unusually large amount of cash into the financial system on Friday, amid the global panic selling — which could push up borrowing costs, and potentially drain liquidity (or the ability to pay debts from cash reserves).

In its daily money market operation, the RBA pumped $8.8 billion into the system through repurchase agreements, well above the estimated requirement of $3.4 billion.

The money was leant to banks for periods ranging from 17 to 95 days.

Reserves held by the RBA for financial institutions have been rising steadily for several days amid a general hunt for liquidity by banks globally.

"There's definitely strains in the market, and the RBA has acted to add extra liquidity to offset that," said Martin Whetton, head of bond and rates strategy at Commonwealth Bank.

The US Federal Reserve, on Thursday, surprised markets by injecting $US500 billion ($794 billion) into the banking system there, and intends to add a further $US1 trillion on Friday.