ASX consumer discretionary shares led the ASX 200 market sectors last week with a minor 0.36% gain over the five trading days.
Meantime, the S&P/ASX 200 Index (ASX: XJO) lost 1.48% to finish the week at 7,724.3 points.
Only two of the 11 market sectors finished the week in the green.
Let's recap.
Consumer discretionary shares led the ASX 200 sectors last week
ASX 200 consumer discretionary shares are arguably the most susceptible to weakness in today's inflationary economy, amid high interest rates and the weakest economic growth since COVID.
As we learned earlier this month, gross domestic product (GDP) rose 0.1% in the March quarter and just 1.1% over 12 months.
Such economic conditions generally encourage people to restrict their discretionary spending, as evidenced by household spending data released by the Australian Bureau of Statistics last week.
The data showed Australians are having to allocate more of their money to essential items and cut back on discretionary items.
Robert Ewing, ABS head of business statistics, said:
We saw a 5.8 per cent rise in spending on non-discretionary goods and services, with households also spending more on fuel and food. In contrast, discretionary spending rose 0.6 per cent over the year as households continue to limit their spending on non-essentials.
One factor supporting discretionary spending is low unemployment. Data released by the ABS last week revealed the jobless rate fell by 0.1% in seasonally adjusted terms in May to 4%.
What else happened last week?
United States inflation data released last week suggested global inflation was resuming a downward path.
The US core consumer price index (CPI), which excludes volatile items like food, increased by 0.2% in May. That put the CPI at 3.4% year over year, the lowest inflation rate in three years.
If inflation falls, so will interest rates, and anything indicating this gets the markets excited these days.
The S&P 500 Index reset its all-time again, and ASX 200 shares lurched forward on Thursday on the news, which prompted speculation the same trend would eventuate here.
After its last board meeting in May, the Reserve Bank said it "remains vigilant to the risk of continued high inflation and is not ruling anything in or out" in relation to rate cuts or even a further hike in 2024.
There has been concern that inflation may prove stickier than expected during what economists refer to as the 'last mile' of reducing it from 3.6% now to the RBA's target band of 2% to 3%.
Is there any chance of an interest rate cut in Australia when the Reserve Bank board meets on Tuesday? Find out here.
Which discretionary retail stocks outperformed last week?
Among the best performers last week was Tabcorp Holdings Ltd (ASX: TAH), up 7.91% over the five trading days to close at 66 cents on Friday. This was despite no news from the company.
JB Hi-Fi Ltd (ASX: JBH) shares also did well, rising 5.71% to finish at $63.28 on Friday.
The biggest of the ASX 200 consumer discretionary stocks, Wesfarmers Ltd (ASX: WES), lifted 1.23% to close at $67.90 on Friday.
The Super Retail Group Ltd (ASX: SUL share price rose by 1.06% over the week to finish at $13.38.
Harvey Norman Holdings Limited (ASX: HVN) shares gained 0.78% to close at $4.50 on Friday.
ASX 200 market sector snapshot
Here's how the 11 market sectors stacked up last week, according to CommSec data.
Over the five trading days:
| S&P/ASX 200 market sector | Change last week |
| Consumer Discretionary (ASX: XDJ) | 0.36% |
| Information Technology (ASX: XIJ) | 0.14% |
| Healthcare (ASX: XHJ) | (0.17%) |
| Consumer Staples (ASX: XSJ) | (0.46%) |
| Financials (ASX: XFJ) | (1.12%) |
| Energy (ASX: XEJ) | (1.47%) |
| Communication (ASX: XTJ) | (1.52%) |
| A-REIT (ASX: XPJ) | (1.56%) |
| Industrials (ASX: XNJ) | (2.44%) |
| Utilities (ASX: XUJ) | (2.64%) |
| Materials (ASX: XMJ) | (4.28%) |
