Daily market update: auto sector, Nasdaq, Marks & Spencer, Next, H&M

“The automotive industry has struck Donald Trump off their Christmas card list after he imposed 25% tariffs on cars and car parts coming into the US from April,” says Russ Mould, Investment Director at AJ Bell.

“It has caused shares in auto companies to go into reverse and weighed on financial markets, with Wall Street firmly in the red last night and Europe following suit on Thursday.

“Mexico, Japan, South Korea, Canada and Germany are the biggest suppliers of auto-related products to the US and stand to lose out if Trump doesn’t back down. It’s another blow to relations between the US and the rest of the world, and a further reason for investors to be gloomy.

“Futures prices imply yet another bad session in the States when markets open for trading later on, meaning American equities are well and truly having a bad year. The Nasdaq Composite is the worst performing index of all the major regions year-to-date, down 7.3% on a total return basis. That compares with a 6.8% positive return from the FTSE 100, 12.9% gain from the Dax and a 17.5% winning turn from the Hang Seng.

“Investors who merrily filled their accounts with US stocks in recent years have had a wake-up call in 2025 that market winners can quickly turn to market losers. That is why diversification is so important in an investment portfolio.

“Marks & Spencer enjoyed a bounce off the back of Next’s upbeat results. Investors may have taken the view that if Next is doing well, so should M&S given the overlap in their customer base. Both shops have middle class appeal — good quality products that are more expensive than found in the discount chains but nothing that will break the bank.

“The pound clawed back some of yesterday’s losses against the dollar as investors had time to digest Rachel Reeves’ Spring Statement. While she made it clear that Labour’s policies will take time to feed through into economic growth, the Office for Budget Responsibility (OBR) upgrading its GDP forecasts from 2026 onwards gave a glimmer hope to markets. The 10-year gilt yield was stable at 4.735%.”

Next

“Next is the envy of the retail sector. Once again it has upgraded sales and profit guidance, leaving its rivals in the dust. Next is typically a cautious outfit, preferring to under-promise and over-deliver, which makes its latest optimism a surprise given the fragile market backdrop.

“A strategic shift that broadens choice for shoppers is paying off. Next sells its own products directly and through third parties, thereby widening the reach for its goods. Next also sells third party products through its website to boost the chances of site visitors finding something they want and not opening a new tab and looking elsewhere.

“The foundations have been laid and the strategy is humming along nicely. Now comes the next part — how to accelerate sales momentum and become a bigger beast in global retail. That will involve enhancements to online services, delivery, marketing and developing stronger third-party relationships. Sounds easy, but it’s not. It will take a lot of hard work and persistence to elevate Next’s position on a global scale.

“Trump tariffs may have little direct impact on the business, yet a trade war still threatens to dampen consumer sentiment and that could send shockwaves across the retail sector and see Next swept up in any chaos.

“For Next, being in a strong position means it is better placed than many rivals to cope with market turbulence. The weakest could fall to the wayside, while Next could gain market share. The key is avoiding a big slump in profits and a lot of that is out of the company’s control given external forces at work.”

H&M

“H&M’s results are proof of the divergent fortunes in retail. Whereas Next is singing from the rooftops, H&M is down in the gutter. H&M’s first quarter gross profit declined, weighed down by widespread discounting which diluted margins.

“It’s not a great start to the year but the Swedish retailer doesn’t seem too fussed. It says the first quarter is always the smallest contributor in terms of sales and margin, and that it’s seeing tentative signs of improvement.

“H&M has been closing stores and spending more money on its digital proposition, similar to many retailers globally. Physical shops are still important as shoppers like to touch and feel products before buying; yet transactions are increasingly made via mobile phones, laptops or tablets.

“Investors will be hoping H&M’s problems have peaked and it is on the path to greatness. Unfortunately, we’ve been in this situation many times before and H&M has a nasty habit of tripping up over and over again.”

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