Renewed fears over the deteriorating health of the US economy hammered the Aussie market on Friday, with the session's losses wiping off all of the week's earlier gains.

The ASX 200 dropped 71 points (-1.7%) for the week, closing at 4102.

Reporting season also kicked into high gear last week, with some of the major companies releasing their results.

In the financial space, ANZ Bank's (ASX:ANZ) disappointing third quarter profit saw it shed 2.1%. Westpac (ASX:WBC) was hit even harder (-4%) after reporting a fall in its 3Q11 cash profit.

The big miners came under renewed pressure amid fears a global downturn will sap commodity demand. BHP Billiton (ASX:BHP) lost 1.9% and Rio Tinto (ASX:RIO) fell 2.9%.

Newcrest Mining (ASX:NCM) was off 2.9 despite surging bullion prices and a big jump in its full year profit.

Energy giant Woodside Petroleum (ASX:WPL) also announced a lift in first half earnings yet still backtracked 4.3% for the week.

Among the industrials, Leighton Holdings (ASX:LEI) had a stellar week (+7.9%) after its full year profit came in line with its guidance.

Wesfarmers (ASX:WES) was another strong performer (+3.8%) after its full year result jumped on the back of its successful Coles turnaround.

Economics

The main focus last week was on the RBA minutes for August, with investors looking for clues on the future direction of interest rates.

The minutes showed the central bank decided against hiking rates this month due to the recent market turmoil.

Downside risks to demand had increased and as a result, the medium-term outlook for inflation had dampened.

However the RBA warned that underlying inflation was still expected to track higher, necessitating the need for further tightening down the track.

The latest Wage Price Index (WPI) reading also seemed to back up the RBA's benign medium-term outlook on inflation.

The WPI rose 0.9% in the June quarter, which was slightly less than economist expectations of a 1% rise.

A slowing domestic economy appears to have kept the lid on wage growth, reducing the pressure on the RBA to lift interest rates.

Overseas wrap

Overseas stocks were caught up in another major sell-off towards the end of last week, continuing the volatility that has plagued markets this month.

Renewed fears about the US economy were triggered by data showing a massive contraction in Philadelphia-area manufacturing activity.

All of the key US indices suffered major losses, with the Dow (-4%), S&P500 (-4.7%) and Nasdaq (-6.6%) on track for their worst month since the height of the GFC in October 2008.

European stock didn't fare much better, with the region's sovereign debt crisis further eroding market confidence.

The DAX (-8.6%) was punished heavily by investors after data showed the German economy screeching to halt in the June quarter. The FTSE was also hit hard, sinking 5.2% for the week.

Asian markets managed to escape the punishment meted out to their US and European counterparts. The Hang Seng slipped just 1.1%, Shanghai Composite fell 2.3% and Nikkei gave up 2.7%.

The heightened risk aversion drove investors to the relative safety of gold, which surged 6.4% to another record high.

Oil and some of the base metals struggled amid concerns a global slowdown will sap demand for commodities.

Weekly Investors Markets Wrap: August 22 is a post from: Australian Stock Report Market Pulse Blog