Sport fans across Australia are rejoicing as major football codes restart their season, following a hiatus enforced by the coronavirus pandemic. The NRL rebooted its season on Thursday, while AFL is set to start on 11 June.

Here are 2 ASX shares to keep your eyes on as elite and social sport returns.

Pointsbet Holdings Ltd (ASX: PBH)

PointsBet is a corporate bookmaker that has operations in both Australia and the US. The company offers its services through a cloud-based platform that allows clients to wager on a slew of sports and racing products. Despite being sold-off earlier this year, the PointsBet share price has bounced a monster 400% from its March lows.

Earlier this week, PointsBet released a trading update that highlighted how the return of NRL and AFL will boost business operations. Despite the disruption of the coronavirus pandemic on these sporting codes, the company was able to record ‘net wins’ for both February and March. PointsBet calculates ‘net win’ as the dollar amount received from clients who placed losing bets, less the dollar amount paid to clients who placed winning bets, less client promotional costs such as money-back offers and bonus bets. 

PointsBet also informed the market that its Australian trading business is continuing a positive trend in the 4th quarter, having achieved a net win of $18.2 million for the period 1 April to 25 May.

In addition to strong Australian operations, PointsBet also elaborated on the company’s agreement to become the exclusive wagering partner for Fox Sports AFL (Fox Footy) for the 2020 season. The agreement will allow PointsBet to target its media assets which will hopefully lead to the acquisition of more clients and increased wagering volumes.

PointsBet also elaborated on its US operations, noting a $0.3 million net win for the period 1 April to 25 May as major sporting leagues closed. Although the PGA has already announced it will return in June, the timeline for other major sports remains uncertain.

Super Retail Group Ltd (ASX: SUL)

Another auxiliary service that could benefit from the return to sport could be Super Retail Group. The group owns prominent retail outlets such as Supercheap Auto, BCF and Rebel. Despite being one of the most shorted stocks on the ASX, the Super Retail share price has bounced more than 139% from its March lows.

As elite and community sport returns, the company’s sporting outlets like Rebel could see renewed demand. In an earlier trading update, Super Retail informed the market that the company has maintained positive sales momentum during the pandemic thanks to a strong online presence. The group’s Rebel sports stores also saw a surge in demand as the shutdown of gyms drove consumers to stock up on home fitness gear.

Foolish takeaway

The restarting of sports in Australia after a prolonged period of social distancing and isolation could reignite demand across all services. In my opinion, sports and related services will be an interesting sector to watch for growth in 2020 and beyond.

More reading

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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Tuesday of next week the Reserve Bank is scheduled to hold its next cash rate meeting.

At present, cash rate futures reveal that the market is divided on what the central bank will do.

Futures are pointing to a 53% probability of rates remaining on hold and a 47% probability of rates being cut to zero.

Could rates go lower?

According to the latest weekly economic update by Westpac Banking Corp (ASX: WBC), its team has suggested that there is a real possibility that the Reserve Bank could not only take rates lower, but also take them into negative territory in the future.

Although the bank maintains is forecast for rates to stay at 0.25% for the foreseeable future, it isn’t ruling out further cuts.

Chief Economist Bill Evans commented: “[A] serious case can be made for the RBA to consider further cuts and entering negative territory for the cash rate if it becomes apparent that the economy is deteriorating even more than is currently expected.”

Mr Evans sees positives in a move to negative rates.

“A small open economy with significant foreign liabilities would certainly see a substantial improvement in the competitiveness of the currency with further rate cuts when other major markets are anchored at their effective lower bounds,” he added.

What are the negatives of negative rates?

It is worth noting that Westpac’s chief economist does have a few concerns over negative rates.

This is mainly the impact they could have on expectations and confidence.

Evans explained: “Is there some nonlinear impact on expectations as rates move into negative – a ‘sticker shock’ even though the same policies have been seen abroad – or does such a bold move strengthen perceptions of the RBA’s determination to deliver on its objectives?”

But Evans believes the Reserve Bank can avoid this by communicating its objectives to avoid any shocks.

“The risks are as much about framing and communication as the policy itself. As we have already seen with the move to ultra-low rates and then QE, if moves come as too much of a surprise, they can exacerbate concerns about the economy and cast doubt on the ability of policymakers to achieve better outcomes,” he said.

Mr Evan concluded: “Although there is a clear current message from the RBA, circumstances can change and astute policy makers (as the RBA has proven to be over many decades) can change with them.”

Foolish takeaway

I would be surprised if rates went lower from here, but anything is certainly possible in the current environment.

But one thing that is for sure, is that in looks set to be many years until rates return to normal levels again.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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