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Trump-Musk feud shakes markets pre-payrolls
The bromance-turned-to-brawl between US President Donald Trump and billionaire Elon Musk sparked a 14 percent drop in Tesla shares overnight, wiping out US$150 billion in market value.
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US President Donald Trump and Elon Musk attend a press conference in the Oval Office of the White House in Washington, DC, on May 30, 2025. (Reuters/Nathan Howard)
It could be the most expensive breakup ever.
The bromance-turned-to-brawl between US President Donald Trump and billionaire Elon Musk sparked a 14 percent drop in Tesla shares overnight, wiping out US$150 billion in market value. Then there's the tens of billions of dollars in SpaceX government contracts that Trump has threatened to cut.
High-stakes political drama aside, investors have not lost sight of the US payrolls report looming later in the day, after a run of soft economic data this week left markets wary of a downside surprise.
Any unexpected weakness in the US labor market could be enough to get the Federal Reserve's policy-makers thinking again about rate cuts, after sitting on their hands since December to assess the inflationary impact of Trump's tariffs.
The Trump-Musk feud was not without wider consequences for markets, though. Even bitcoin prices tumbled 4 percent overnight as investors reckoned Trump's support should perhaps not be counted on indefinitely.
Asian technology shares followed Wall Street lower, helping to nudge most of the region's stock markets into negative territory. Japan's Nikkei was an exception, rising 0.3 percent.
There were signs in the Asia morning on Friday that tempers may be cooling down a bit, with Trump telling Politico that "it's okay" when asked about the breakup and Tesla stocks steadying in after-hours trading.
In the meantime, investors found little reason to cheer the phone call on trade between Trump and Chinese President Xi Jinping, which produced little more than an agreement to talk further.
As for the US payrolls, forecasts are centered on a rise of 130,000 jobs in May, with the unemployment rate holding steady at 4.2 percent.
Fed funds futures imply little chance of a rate cut until September, although a move at that time is about 90 percent priced in with another expected in December.
Worries of a downside surprise on payrolls kept markets subdued. Wall Street futures, were mostly flat and European markets are set for a lower open, with EUROSTOXX 50 futures down 0.2 percent.
In the currency markets, the euro rose to a six-week high of $1.1495 overnight after the European Central Bank cut rates but signaled it was nearing the end of its policy easing cycle. Investors have given up on the chances of a cut in July, while the final move is expected in December.
