ASX retail shares on watch amid potential cuts to COVID-19 isolation requirements

Help could be on the way for the retail sector.

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Key points

  • Supply issues are impacting the retail sector as COVID-19 forces workers into isolation
  • Federal Treasurer Josh Frydenberg has flagged cutting isolation requirements to five days
  • Consumer confidence fell in the second week of January

ASX retail shares are on watch today amid talk of potential cuts to COVID-19 isolation requirements to five days.

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) dropped 0.25% yesterday to finish at 3,398.50 points. Meanwhile, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) fell 0.17% to 12,670.00 points.

Let’s take a look at what may impact retail shares today.

Isolation cuts

Supermarkets and retail outlets have been facing supply issues due to worker shortages amid the COVID-19 outbreak in Australia.

Some of the retail shares on the ASX include Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW)Wesfarmers Ltd (ASX: WES), and Harvey Norman Holdings Limited (ASX: HVN).

Other big-name retailers include Adairs Ltd (ASX: ADH), JB Hi-Fi Limited (ASX: JBH), Kogan.com Ltd (ASX: KGN), City Chic Collective Ltd (ASX: CCX) and Australian Pharmaceutical Industries Ltd (ASX: API).

The Australian Financial Review reported COVID-19 isolation requirements could be cut to five days to help solve the worker supply issue. Federal Treasurer Josh Frydenberg said during a speech in Melbourne:

I do note that a number of other countries around the world have actually reduced the isolation requirements, even for those who have tested positive from seven or 10 days, down to five days.

It’s never set and forget. The government will do everything possible to help support the Australian community on both the health and the economic front.

The news comes as consumer confidence has dropped to its lowest level since October. A survey from ANZ-Roy Morgan, released on Tuesday, shows confidence dropped 8.1 points in the second week of January to 97.9.

ANZ Economics head David Plank said:

Consumer confidence dropped 7.6% last week as Omicron case numbers surged. Consumer confidence readings are usually positive during the month of January and the level of 97.9 is the weakest January result since 1992, when the Australian economy was experiencing sharply rising unemployment. 

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The author has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended ADAIRS FPO and Kogan.com ltd. The Motley Fool Australia owns and has recommended ADAIRS FPO, COLESGROUP DEF SET, Harvey Norman Holdings Ltd., Kogan.com ltd, and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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