The benchmark S&P-ASX 200 index hit a three-week low of 4388 points before rebounding slightly to 4392.3 points, down 1.4%, by midday, while the All Ordinaries was also down 1.4% to 4415 points.

However, the Aussie market was outperforming Wall Street, where the Dow Jones Industrial Average slipped 2.5% to 10,378.83 points overnight and the S&P 500 fell 2.8% to 1089.47 points.

The fall on Wall Street came on the back of news the US trade gap had widened sharply in June to the highest level in 20 months on the back of rising imports.

According to Commerce Department data, the $US49.9 billion trade gap was larger than the $42.0 billion posted in May, compared to an expected June deficit of around $42.2 billion.

Closer to home and the mining heavyweights were also languishing in a sea of red. Just after midday BHP Billiton was down A31c to $39.67, while Rio Tinto had shed $1.59 to $69.50.

Australia’s third largest iron ore miner Fortescue Metals Group was trading 15c lower at $4.34, OZ Minerals was down 3.5c to $1.165 while Paladin Energy was down 8c to $3.87.

On the London Metal Exchange all base metals traded lower last night. Copper for three-month delivery was down 1.4% to $US7200 per tonne, nickel shed 2.3% to $21,695/t and zinc fell 2.3% to $2037/t.

Spot gold was last trading at $1198.20, up 32c, at 12:20 AEST. Newcrest Mining was down A51c to $33.73, Lihir Gold was down 4c to $4.19 and Kingsgate Consolidated had shed 17c to $9.65.