ASX 200 (XJO) morning report – ASX retail shares in the spotlight

The S&P/ASX 200 (INDEXASX: XJO) is expected to open higher this morning according to the latest ASX futures. Here’s what ASX investors need to know.

ASX 200 falls, China achieves economic feat

The ASX 200 started the week on a negative footing, falling 0.8% on Monday. The discretionary retail (0.2%) and IT (0.5%) sectors were the only highlights but weren’t sufficient to offset a fall in the materials sector (-1.9%).

It was the normal culprits pushing the market lower, with BHP Group Ltd (ASX: BHP) down 2.9% despite iron ore prices nearing an all-time high last week.

Chinese economic data was released overnight which position the economy as the only major, developed country to achieve positive growth in the ‘pandemic year’, finishing up 2.3% for 2020.

It was Chinese Government policy in action that saw GDP jump 5.6% in the December quarter, driven by industrial production and retail sales which were 7.3% and 4.6% higher in response to lower taxes and greater infrastructure spending. Despite the headlines, this does bode well for the Australian economy which has a significant amount of two-way trade.

Healthcare was the most surprising sector, with Pro Medicus Limited (ASX: PME) and private hospital operator Ramsay Health Care Limited (ASX: RHC) increasing 11.8% and 5.6%, respectively, despite a lack of any news. Investors may be pre-empting a release of stringent lockdowns in the US and Europe.

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JB Hi-Fi signals bumper first-half results

Shares in specialist electronics and white goods retailer JB Hi-Fi Limited (ASX: JBH) added 3.8% on Monday after flagging an 86% increase in profit for the first half of the year, hitting $371.1 million. The discount retailer’s operating leverage was on show, with the result coming on the back of a 23.7% increase in sales to $4.94 billion.

JB Hi-Fi’s management noted the resilience of its business model, continuing to pay both staff and rent throughout the first half and not receiving any JobKeeper payments.

The record sales result was driven by a 161% increase in online or click and collect sales, which increased to $678.8 million or 13.7% of total sales. With the growing likelihood that Australians will not be travelling for at least another 12 months, JB Hi-Fi’s sales potential may still be underappreciated.

Super Retail Group Ltd (ASX: SUL) shares fell 1% despite reporting a 23% increase in first-half sales to $1.7 billion, a record result, and announcing the repayment of its JobKeeper benefits. Boating Camping Fishing, or BCF, was the highlight growing total sales at 51% and online sales by 113% for the period to Boxing Day.

Meanwhile, Mark McInnes, the CEO of leading retailer Premier Investments Limited (ASX: PMV), has decided to step down from his role of 10 years after successfully guiding the company through 2020.

QBE Insurance whacked by courts

QBE Insurance Group Ltd (ASX: QBE) was the biggest detractor on Monday after losing another court case in the UK related to the payout of business interruption due to COVID-19.

The UK High Court ruled in favour of businesses in what was deemed a test case by the UK Government. This doesn’t bode well for QBE’s short-term profitability, with the total allowance for COVID-19 now out to $785 million; shares fell 5.7%.

It is the Martin Luther King holiday in the US, so markets are closed with little in the way of news before Biden takes the White House on Wednesday.

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Disclosure: At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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