Australia’s investment watchdog is monitoring volatility in financial markets as fears of a global recession in the face of the spread of the coronavirus continues to spook investors.

Wall Street stocks plummeted more than four per cent on Thursday, with the Dow Jones Index recording its biggest point drop on record, at 1191 points, in what one analysis described as “pandemic paranoia”.

Australian shares followed suit, tumbling around three per cent in early trading on Friday, marking a fifth straight day of losses.

Australian Securities and Investments Commission chair James Shipton told a federal parliamentary committee he’s working closely with fellow regulators, both domesticaly and overseas, to monitor the situation.

“Our practice in these types of scenarios, ASIC has contacted significant market participants to ascertain what business continuity arrangements they have in place,” Mr Shipton said.

“ASIC is also monitoring the continuous disclosure of listed entities as a result of changing market sensitivities and volatility.”

Markets were rattled when World Health Organisation Director General Tedros Adhanom Ghebreyesus warned the COVID-19 outbreak had reached a “decisive point” and urged countries to redouble efforts to contain its spread.

“This virus has pandemic potential,” he said.

Prime Minister Scott Morrison on Friday warned the global spread of the virus would have a big impact on the Australian economy.

“We have a strong, stable financial base to address this, but we can’t kid ourselves that the impact of the coronavirus globally, here in Australia, is not going to be significant,” Mr Morrison said.

But deputy Labor leader Richard Marles said the economy was already sluggish before this summer’s bushfires and the COVID-19 outbreak.

“We have been calling for stimulus since the election,” Mr Marles told Nine’s Today program.

Economists expect next week’s national accounts for the December quarter will show another soft economic growth result.

The government extended its ban on Chinese visitors entering Australia for another week, actions that have already had a major impact on the tourism sector.

The Tourism and Transport Forum estimates the number of foreign travellers visiting the country between January and June 2020 will be down 40 per cent on the same period in 2019.

TTF chief executive Margy Osmond says its economic modelling shows if the virus is not contained within the next three to six months, the sector would lose an average $2 billion a month beyond March.

Home Affairs Minister Peter Dutton said the government is already doing work with Treasury to look at ways to provide assistance “at the right time”.

“The priority at the moment is the health of the nation,” he told Nine’s Today program.