Australian shares have plunged again on renewed concerns about the economic havoc wreaked by the rapidly spreading coronavirus.

Key points: Travel and financial stocks were hardest hit in the S&P 500's 3.4 per cent drop to 3,024 points

Travel and financial stocks were hardest hit in the S&P 500's 3.4 per cent drop to 3,024 points Gold prices jumped as 10-year US Government bonds fell to their lowest yield on record, below 0.9 per cent

Gold prices jumped as 10-year US Government bonds fell to their lowest yield on record, below 0.9 per cent Australian shares dropped 1.6 per cent at the open but closed 2.8 per cent lower

The ASX 200 finished 2.8 per cent lower at 6,216 points, having been down less than 2 per cent for most of the day.

The steep drop wiped out all of yesterday's solid gains and plunged the local market deeper into correction territory.

The Australian share market has now lost well over $300 billion from its record value ahead of the two-week sell-off.

Nearly every sector posted heavy losses, with only telcos trading slightly higher and technology, consumer discretionary and financials being the weakest performers (losing around 4 per cent each).

Only 20 stocks in the benchmark index finished higher, including gold miners like Regis Resources, Saracen Mineral and Gold Road Resources.

Travel-related stocks were pummelled by coronavirus fears with further losses for Qantas (-8.1pc), Flight Centre (-7.1pc) and Webjet (-4.7pc).

The biggest losers on the ASX 200 included Ooh!Media, Avita Medical and Virgin Money UK, which all dropped more than 10 per cent.

The Australian market followed a pessimistic lead from Wall Street.

At its lowest point overnight, the industrial-skewed Dow Jones index plummeted by as much as 1,100 points.

However, the Dow came off its lows to finish 970 points (or 3.6 per cent) lower at 26,121 — wiping out nearly all of its previous day's gains.

The benchmark S&P 500 and tech-heavy Nasdaq indices plunged by 3.4 and 3.1 per cent, with travel and financial stocks being the hardest hit.

Meanwhile, the Australian dollar has risen back to 66.1 US cents, having rallied after the US Federal Reserve surprisingly cut rates earlier this week.

'The year of the virus'

"I thought 2020 would be the year of the election but it turns out it's the year of the virus, and it's going to dominate everything in the global economy this year," said David Kelly, chief global strategist at JPMorgan Asset Management.

As fears of COVID-19 cripple travel demand, the International Air Transport Association flagged a potential $US113 billion hit to global airline travel, sending the S&P 1500 Airlines Index down more than 8 per cent.

It was a complete reversal of the previous day's rally, sparked by former US vice-president Joe Biden's surprisingly strong performance in the Democratic nomination campaign and an $US8.3 billion funding bill to combat the coronavirus in the US.

Global markets have experienced a volatile week as Australia's Reserve Bank, and its US and Canadian counterparts, announced emergency interest rate cuts to keep their economies afloat against the viral epidemic.

AMP Capital's chief economist Shane Oliver said the volatility on markets is being driven by uncertainty about the eventual scale of the outbreak and severity of COVID-19, combined with record-low rates and improving valuations on stocks after the recent market plunge.

"On the positive side shares have had 12 per cent plus falls, they are now very cheap compared to lower bond yields and interest rates, investor sentiment is now negative, which is positive from a contrarian point of view, Chinese shares have been able to rally back all the way to pre-virus levels, the US dollar has now fallen back sharply removing the risk of a 'dollar funding' crisis and policy stimulus has ramped up dramatically over the last week with central banks led by the RBA and the Fed moving to cut rates and governments starting to boost spending as well," he outlined.

"But while these things are all positive and maybe shares have already factored in the worst, we really need to see evidence that the outbreak is coming under control or will have a limited economic impact. At this point, this is still lacking.

"Policy stimulus and support for badly hit businesses (to prevent insolvency) is necessary to minimise the economic fallout and supercharge the eventual recovery, but it won't stop the virus and the short-term economic disruption it is causing.

"Key to watch for in the short term are signs that the number of new cases (outside China) has peaked (as per the first chart) and/or indications that a vaccine or anti-virals will soon bring it under control or perhaps a refocus by authorities away from containment to just focussing on treatment of the really ill (as occurred with the, albeit less deadly, swine flu a decade ago)."

Rush to gold and bonds

"We have not seen the eye-wall of this storm yet," Mr Kelly said, as he urged investors not to panic.

"But it will gradually fade and as it does the global economy will pick up relatively quickly in 2021."

As the share market sell-off intensified, investors piled into safe-haven assets like gold and US government bonds.

The spot price for the precious metal jumped 2.3 per cent to $US1,673.82 an ounce, while the benchmark 10-year Treasury yield dropped to a record low (below 0.9 per cent).

Oil markets were also punished with Brent crude sinking by 2.4 per cent, just below $US50 per barrel.

This was despite the Organisation of the Petroleum Exporting Countries (OPEC) — which includes oil-rich nations Saudi Arabia, Iraq and Libya — agreeing to cut oil production by 1.5 million barrels per day.