The S&P/ASX 200 Index (ASX: XJO) is losing ground on Thursday, with another wave of selling pushing the market closer to the 9,000-point mark.
At the time of writing, the benchmark is down 0.77% to 9,057 points after touching an intraday low of 9,053 points.
That puts the index at its lowest level in 4 trading days and continues the pullback from the stronger levels seen earlier this month.
There also aren't many places for investors to hide today, with 144 shares trading lower compared with just 48 moving higher.
So, what's behind the weakness?
Image source: Getty Images
Rate hike concerns are growing
The biggest issue hanging over the market is the changing outlook for interest rates.
Wednesday's hotter-than-expected inflation figures already had investors reconsidering whether the RBA could raise rates again.
Household spending increased 1.1% in July and was 7% higher than a year earlier, showing Australian consumers are still spending despite higher borrowing costs.
The latest figures have added to concerns that another RBA rate hike could be on the way.
That's worth watching with the share market still trading close to record highs, and valuations are already looking pretty high.
Morgan Stanley has warned that Australian equities are "not priced for a hike", noting the ASX 200 is trading on a 12-month forward P/E ratio of 18.1 times.
With another rate hike now a real possibility, investors are becoming more cautious after the market's run towards record levels.
Most sectors are moving lower
The weakness is spread across most sectors, but several large companies are doing plenty of damage to the index.
BHP Group Ltd (ASX: BHP) shares are down 0.95% to $66.76, while fellow heavyweight Commonwealth Bank of Australia (ASX: CBA) shares are 0.15% lower at $155.22.
Wesfarmers Ltd (ASX: WES) shares have dropped 1.36% to $82.14, while Woolworths Group Ltd (ASX: WOW) shares are down 3.21% to $38.89.
Property shares are also weaker, with Goodman Group (ASX: GMG) down 1.06% to $27.92.
Nonetheless, there are still a few pockets of strength.
Qantas Airways Ltd (ASX: QAN) shares are up 4.39% to $9.63 following the company's FY26 result, while CSL Ltd (ASX: CSL) shares are 0.44% higher at $173.20.
Foolish takeaway
The ASX 200 is now sitting less than 60 points above the psychological 9,000-point mark, so that level will be worth watching if the selling continues.
Much will depend on whether concerns around another rate hike ease or build further in the lead-up to the RBA's September meeting.
