A plunge in financial stocks has dragged the Australian sharemarket to its lowest point in seven months, pushing the bourse deeper into correction territory.

The Commonwealth Bank is in focus as trading in its shares resumes today.

Investors had already sold off the major banks after the lenders all launched recent capital raising plans, driving the stocks down around 20 per cent from their March highs, and were quick to punish the stocks again on the threat of further capital accumulation. By around midday the market had managed to wobble higher with some well-received profit announcements.

The benchmark S&P/ASX 200 index finished 65 points, or 1.2 per cent, lower at 5303.1, while the All Ordinaries index dropped 59 points, or by 1.1 per cent, to 5309.4. “Worries about Chinese demand, rising US interest rates and a sluggish Australian economy have investors concerned about share prices”, he said.

I think those choosing to buy today must be in it for a very long time because the medium-term downside risk is large and probable for each of the banks.

The Australian dollar was down slightly at 73.5 US cents just after 5:00pm.

Net profit in the year tumbled 61.8% to $218 million compared to $570 million and diluted earnings per share declined to 33.3 cents from 98.2 cents in the same period a year ago.

But shares in the big banks began to tumble from the early afternoon, dragging the market down with them.

National Australia Bank had climbed 50 cents, or 1.57 per cent, to $32.26, ANZ had lifted 23 cents, or 0.79 per cent, to $29.52, and Westpac rose 61 cents, or 1.95 per cent, to $31.94.

Energy stocks sank as Brent crude oil slumped to $US48.62 a barrel. Meanwhile, Newcrest Mining Ltd (ASX:NCM) added 4.47% or 0.490 points to end at 11.440 and Flexigroup Ltd (ASX:FXL) was up 4.35% or 0.110 points to 2.640 in late trade. The weaker profit came despite a 7.3 per cent rise in revenue for the year ended 30 June to $4.2 billion.