2 ASX 200 retail shares devastated following US rate decision

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ASX 200 retail shares JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) had a rough end to the week.

JB Hi-Fi shares fell 4.36% on Friday, while Harvey Norman shares descended 4.66%. For perspective, the S&P/ASX 200 Index (ASX: XJO) slipped nearly 1.9% on Friday.

Let’s take a look at what may have impacted ASX 200 retail shares.

Interest rate rise

ASX 200 shares, including retail shares, struggled on Friday following grim news out of the United States. The US Federal Reserve lifted interest rates by 0.75%. More rate hikes are planned and there are fears of a recession.

Higher interest rates not only increase borrowing costs for companies, they can also dampen retail spending as consumers have less available cash.

The Reserve Bank of Australia often takes its lead from the US Federal Reserve. Commenting on the prospect of the RBA lifting rates in the Australian Financial ReviewBetaShares chief economist David Bassanese said:

It now seems more likely than not that the RBA will lift rates by 0.5 per cent in October.

Meanwhile, AMP’s Shane Oliver is predicting retail sales will rise “just 0.1% in August” after lifting 1.3% in July, the publication reported.

Share price snapshot

The JB Hi-Fi share price has fallen nearly 16% in a year, while Harvey Norman shares have slipped nearly 19%.

For perspective, the ASX 200 has fallen nearly 11% in the past year.

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