Rate Hike Fears Send Aussie Shares into Defensive Mode

Australia's sharemarket faced fresh fears of interest rate hikes on Monday, leading to a 'defensive rotation' away from rate-sensitive sectors.

The benchmark ASX 200 gained just 0.01% to 8731.90, while the All Ordinaries slipped 0.04% to 8919.10.

Fears of interest rate hikes have grown since Reserve Bank of Australia governor Michele Bullock warned that upside risks to inflation had 'materialised', prompting money markets to fully price in another rate hike when the RBA meets on September 28-29.

This would be the fourth interest rate hike this year, as the central bank continues to fight inflation.

Joseph Marassa from Global X ETF strategy said traders were making a 'defensive rotation' due to higher for longer interest rates and fears of persistent inflation.