Australian Share Market Sees Defensive Rotation Amid Rate Hike Fears

Australia's share market experienced a defensive rotation on Monday as traders shifted away from rate-sensitive sectors in anticipation of another interest rate hike. The Reserve Bank of Australia governor Michele Bullock warned last week that upside risks to inflation had materialized, increasing the likelihood of a fourth rate hike this year.

The benchmark S&P/ASX 200 index gained just 0.70 points or 0.01% to 8731.90, while the broader All Ordinaries slipped by 3.60 points or 0.04% to 8919.10. Australia's dollar firmed against the greenback to buy 71.26 US cents.

The healthcare and financial sectors outperformed, with Commonwealth Bank, National Australia Bank, Westpac, and ANZ all posting gains. However, technology stocks fell, led by a 4.30% drop in Xero shares to $60.08 and a 3.35% decline in NextDC to $10.98.

Global X ETF strategy analyst Joseph Marassa attributed the defensive rotation to higher for longer interest rates and fears of persistent inflation. 'The domestic market continues to contend with a restrictive monetary policy environment,' he said.