The Australian sharemarket closed lower on Wednesday after it was led down by a weak financial sector during afternoon trade.

At the 1615 AEST official market close, the benchmark S&P/ASX200 index slumped 0.53 per cent to 4,645 points, while the broader All Ordinaries index fell 0.48 per cent to 4,694 points.

Among the sectors, financials were down 0.8 per cent, energy dipped 0.6 per cent, while materials inched 0.1 per cent higher.

"The market opened around its highs but drifted lower throughout the day. Profit-taking and a lack of any buying ahead of end of quarter tomorrow are possible explanations for the sell off," CMC Markets international equities dealer David Barrett-Lennard said.

According to him, an announcement from Fitch Ratings agency on Wednesday, stating that it will perform a stress test analysis of the Australian housing market, may have also weighed on the market.

All four banks drifted into the red after being in positive territory in the morning.

ANZ Banking Group lost 0.74 per cent to $24.14, Commonwealth Bank of Australia edged down 1.04 per cent to $52.05, National Australia Bank gave back 0.91 per cent to $25.90 and Westpac Banking Corp turned down 1.29 per cent to $23.71.

Meanwhile, investment bank Macquarie Group dropped 0.80 per cent to $37.

In the resources sector, market heavyweight BHP Billiton dipped 6 cents to $39.37. Fellow mining giant Rio Tinto improved 26 cents to $77.26.

Junior miner Fortescue Metals Group slid 0.57 per cent to $5.15.

Among the oil companies, Woodside Petroleum reversed 0.80 per cent to $44.44, Santos shed 0.84 per cent to $12.97, while Oil Search dropped 0.16 per cent to $6.13.

Gold miner Newcrest Mining gained 1.57 per cent to $40, after the price of gold rose to a new record high overnight.