Since the start of September, Australian shares all but erased gains made this year amid expectations that the Federal Reserve would flag a more definitive time frame for when it will raise interest rates in the US, given the world's largest economy is improving.

The sell-off has been intensified by the looming approach of an October deadline to end the Fed's massive stimulus program, which for the past two years has underpinned a strong rally in global equities.

Australian shares are down 0.9 per cent for the year to date with the benchmark S&P/ASX 200 trading at 5415 points. The local share market is expected to fall 0.6 per cent or 33 points when the market resumes trading on Wednesday.

But Perpetual's head of investment research, Matthew Sherwood, doubts that the sell-off will go much further.

He said despite expectations of higher rates and the end of quantitative easing, the US fiscal tightening "will be gradual and will not danger the global outlook,"

He added that it would be very tough to build up the excesses that typically end a cycle, and while the recovery has been one of the weakest in history, it could well prove be one of the longest on record.

Societe Generale also sought to downplay the sharp sell-off in equities by saying that it has been "limited as Fed policy remains very accommodative.

Two of the firm's researchers, Patrick Legland and Daniel Fermon, said that while there is a risk of a more significant correction in equities, Fed policy will remain supportive for equities as long as inflation remains in check.

"The risk is that a sudden and sharp repricing of US rates could trigger higher volatility in both the bond and equity markets.

"This could happen in the event of better economic data and a pick-up in inflation," they said in a report this week.

"But our economists don't see any convincing sign of inflation or any strong improvement in wages until the tail-end of the year."