All subindexes end in red Financial stocks lose most AGL ends...

	  All subindexes end in red  

	  Financial stocks lose most  

	  AGL ends as second-biggest loser in benchmark 

(Updates to close)

Australian shares logged their worst day since early July on Wednesday, led by declines in the financial and commodity stocks, as investor sentiment globally took a hit after rating agency Fitch downgraded United States government credit.

The S&P/ASX 200 index (xjo) closed 1.3% lower at 7,354.7 points, posting its biggest daily decline since July 7. All subindexes ended lower.

The benchmark rose 0.5% on Tuesday. Fitch downgraded the U.S. to AA+ from AAA, citing fiscal deterioration over the next three years and a growing general government debt burden.

"Fitch's abrupt downgrade of U.S. rating came as a shock to global markets," said Glenn Yin, head of research and analysis at AETOS Capital Group.

"The Australian markets are cautiously manoeuvring in uncertainty and bracing for the full impact tonight when Wall Street wakes up."

Australian financial stocks .AXFJ , which occupies one-third of the benchmark, was the worst affected, dropping as much as 2% and logging their worst day since May 31.

The country's largest banks lost in the range of 1.5% and 2.3%.

Resources stocks also bore the brunt of weak risk confidence, with miners .AXMM dropping about 1.2% on lower iron ore prices in top steel producer China. Top mining companies Rio Tinto (RIO) , BHP Group (BHP) and Fortescue Metals (FMG) lost between 1.1% and 1.8%.

The energy .AXEJ and the gold .AXGD subindexes also slumped 1% and 1.9%, respectively.

In corporate news, Australia's top power producer AGL Energy (AGL) was one of the top losers in the benchmark, slipping 4.8%. Macquarie downgraded the stock to "neutral" from "outperform", citing likely headwinds to fiscal 2025 earnings.

New Zealand's benchmark S&P/NZX 50 index (nz50) finished about 0.2% lower at 11,962.04 points.

The country's jobless rate rose slightly in the second quarter from the previous quarter.