Asia shares retreat, Lidl and Marks & Spencer in focus, housebuilders’ mixed reaction to property price data and Revolution Beauty settles spat with former shareholder

“January can be a testing time for markets and that’s already proved the case with Asian equities as investors fret about the impact of Donald Trump’s trade policies,” says Russ Mould, Investment Director at AJ Bell.

“The Shanghai SE index fell 2.7% while Hong Kong’s Hang Seng dropped 2.2%. Technology and industrial stocks were among the areas worst hit, dragged down by weak Chinese manufacturing data and the fact Trump will be back in power in just over a fortnight. Tariffs are expected to be at the top of the new president’s agenda and China is expected to be the biggest loser.

“The double whammy of disappointing economic data and a new headwind in the form of potentially higher tariffs on goods sold into the US is problematic for market sentiment towards China. It’s going to take a miracle to make investors regain confidence in the Asian superpower.

“Given this situation, it was somewhat perplexing to see mining companies dominate the FTSE 100 risers’ list. China is a significant player in the global commodities market and negative economic data typically casts a dark cloud over the mining sector for fear that metals demand will weaken. The jump in mining shares including Antofagasta and Glencore will have been influenced by a weaker pound against the US dollar. Miners earn in dollars and a weaker pound means they will report higher earnings in pound terms, benefiting their share price.”

Retail: Lidl and Marks & Spencer

“The first trading day of the new year often leads investors to speculate which retailers had a good or bad Christmas. Judging by its share price jump, investors are putting their money on Marks & Spencer to have cleaned up over the festive season. There were already reports pre-Christmas that shoppers were loading up their baskets with Marks & Spencer’s premium-quality food and drink products, and its clothes were such a big hit with the nation during 2024 that it seems logical to suggest many people gifted them on 25 December.

“However, nothing is certain until we see the actual numbers and there is still the potential for Marks & Spencer to disappoint. Lidl flagged a bumper festive performance, including strong demand for party food and bottles of fizz – traditionally an area where Marks & Spencer dominates.

“Lidl’s revenue growth for the four weeks up until Christmas Eve was down on the same period a year earlier but that’s without the tailwind provided by higher inflation in 2023 and the chain is attracting more customers than ever before.

“It might take another week or so to get a clearer picture of retail’s golden quarter, but it seems highly likely that the sector will have its fair share of losers. Spending data from Visa implies that electronics retailers could have seen a last-minute rush, but many clothing and accessories providers might have struggled.”

Housing market

“Housebuilders got a New Year fillip with data from Nationwide implying the UK housing market is in decent shape as 2025 gets underway, with prices notably rising for a fourth month in a row in December.

“However, early gains for the sector began to evaporate with investors’ eyes on the potential for a sugar rush of transactions ahead of looming stamp duty changes, with something of a crash to follow.

“Changes to stamp duty on 1 April will be a big motivation to conclude purchases as soon as possible. It may only be in the spring that we get a true picture of the prospects for the property market and the housebuilding industry.”

Revolution Beauty

“Shares in Revolution Beauty soared after agreeing a settlement with a disgruntled former shareholder. Chrysalis had previously threatened legal action against the company, alleging that it had misled investors. A full-blown court case could have knocked Revolution Beauty for six if found guilty, but this overhang has now been cleared via a ‘non-material sum’ settlement.

“Revolution Beauty is not out of the woods just yet. It is still subject to an investigation by the FCA around potential market abuse that began in July 2023. The fact this is still ongoing is cause for concern. It means that Revolution Beauty’s management team cannot focus their entire attention on the company’s turnaround programme.”

These articles are for information purposes only and are not a personal recommendation or advice.