ASX 200 consumer discretionary shares outperformed the 10 other sectors over the shortened trading week, soaring 8.05%.
Consumer staples shares weren't far behind, surging 7.62%.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) rose 2.07% to 8,804 points by Friday's close.
Experts are now predicting an eventual cut for interest rates due to crumbling consumer confidence and low GDP growth.
Consumer sentiment fell in May to one of its weakest levels ever in the 50-year history of the benchmark monthly survey.
Softer-than-expected inflation also enhances the case for rates to be kept on hold or cut at some point.
Annual headline inflation fell to 4.2% in April, down from 4.6% in March, according to Bureau of Statistics figures.
On Friday, the ASX 200 rallied 1.98% after US President Donald Trump said a peace deal with Iran could be reached this weekend.
This would likely lead to the reopening of the Strait of Hormuz, a vital shipping route that carries 20% of the world's oil and gas.
The ongoing oil shock has contributed to resurgent inflation and three interest rate increases in Australia this year.
The Reserve Bank will announce the next interest rate decision on Tuesday.
It may seem counterintuitive that signs of economic weakness boosted ASX 200 retail shares last week.
But remember, share markets tend to look six to 12 months into the future.
Thus, economic weakness today is pushing retail stocks up as investors anticipate a greater likelihood of interest rate cuts.
Let's see how some individual retail stocks performed last week.
Image source: Getty Images
Consumer discretionary shares led the ASX sectors last week
The Wesfarmers Ltd (ASX: WES) share price leapt 9.55% over the short trading week to finish at $86.47.
Shares in gaming technology company Aristocrat Leisure Ltd (ASX: ALL) rose 5.07% to $53.91.
The Lottery Corporation Ltd (ASX: TLC) share price soared 8.81% to $5.68.
The Light & Wonder Inc (ASX: LNW) share price ripped 9.8% higher to $127.26.
JB Hi-Fi Ltd (ASX: JBH) shares ascended 7.6% to finish the week at $77.24.
The Harvey Norman Holdings Ltd (ASX: HVN) share price increased 7.88% to $4.79.
Temple & Webster Group Ltd (ASX: TPW) shares soared 13.09% to $5.27.
The Nick Scali Limited (ASX: NCK) share price rocketed 11.71% to $15.46.
Eagers Automotive Ltd (ASX: APE) shares rose 7.06% to $22.29.
The Super Retail Group Ltd (ASX: SUL) share price lifted 8.39% to $12.27.
Lovisa Holdings Ltd (ASX: LOV) shares surged 8.66% to $22.20 apiece.
ASX 200 travel share Flight Centre Travel Group Ltd (ASX: FLT) edged 0.36% higher to $11.07.
The Guzman Y Gomez Ltd (ASX: GYG) share price lifted 3.63% to $19.40.
ASX 200 market sector snapshot
Here's how the 11 market sectors stacked up last week, according to CommSec data.
Over the shortened trading week:
| S&P/ASX 200 market sector | Change last week |
| Consumer Discretionary (ASX: XDJ) | 8.05% |
| Consumer Staples (ASX: XSJ) | 7.62% |
| A-REIT (ASX: XPJ) | 4.95% |
| Healthcare (ASX: XHJ) | 3.33% |
| Industrials (ASX: XNJ) | 3.23% |
| Utilities (ASX: XUJ) | 2.86% |
| Communications (ASX: XTJ) | 2.51% |
| Financials (ASX: XFJ) | 1.05% |
| Materials (ASX: XMJ) | 0.79% |
| Energy (ASX: XEJ) | (0.07%) |
| Information Technology (ASX: XIJ) | (4.58%) |
