Trump-Musk feud shares markets ahead of payrolls

General market commentary

U.S. equities ended lower on Thursday, with the S&P 500 down 0.5 percent, the Nasdaq Composite falling 0.8 percent, and the Dow Jones Industrial Average slipping 0.3 percent, as a sharp 14 percent drop in Tesla shares dragged markets into the red following President Trump's threat to revoke government support for Elon Musk’s companies. This overshadowed earlier gains sparked by a positive phone call between President Trump and Chinese President Xi Jinping, during which the two leaders discussed progress on a preliminary trade deal and agreed to resume negotiations, temporarily easing trade tensions. Despite the upbeat tone from the call, all sectors except communication services closed lower, led by a 2.5 percent drop in consumer discretionary.

Labour market data added to the cautious sentiment, with weekly jobless claims rising to their highest since October 2024 and job cuts jumping 47 percent year on year according to Challenger. Meanwhile, a record narrowing in the U.S. trade deficit driven by a sharp drop in imports could temporarily boost second-quarter GDP but also reflects underlying economic volatility tied to trade policy uncertainty. Attention now turns to Friday’s nonfarm payrolls report with markets expecting a gain of 125000 jobs. A weaker print could reinforce the view that the Federal Reserve will keep interest rates unchanged until September.

Latest market and economic update

Asian equities were broadly flat on Friday as investors awaited updates on U.S.-China trade talks, with Chinese markets muted despite a positive Trump-Xi call and Wall Street weakness weighing on sentiment. Japan’s Nikkei and TOPIX rose 0.5 and 0.6 percent respectively, supported by soft spending data that dimmed prospects of further Bank of Japan rate hikes.

US equity futures showed a modest rise as reports emerged of a planned conversation between President Donald Trump and Tesla CEO Elon Musk, helping to ease market tensions after Tesla’s recent sharp decline. In after-hours trading, Tesla’s shares rebounded by five percent, recovering some of the value lost amid the public dispute between the two figures.

European shares rose yesterday following the ECB’s 25 basis point rate cut and a downward revision to inflation forecasts, which boosted market sentiment despite lingering uncertainty. German factory orders surprised with a rise in April, defying expectations of a decline and supporting the positive close.

The US dollar steadied around 98.8 this morning as investors awaited the May jobs report amid ongoing trade uncertainties and weaker economic data. The dollar has broadly weakened this week, including against the euro, which is currently trading near 1.1440, reflecting concerns over US growth and cautious Federal Reserve comments.

Oil prices dipped slightly in Asian trading amid concerns over slowing global growth and demand, though increased military action between Russia and Ukraine helped limit losses. Despite headwinds from weak economic data, oil is set for its first weekly gain in three weeks, supported by expectations of tighter global supplies and potential new US sanctions on Iran and Russia.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Broadcom forecast third-quarter revenue slightly above expectations, driven by strong demand for AI and networking chips, but shares fell 4% after hours amid high investor expectations. The company reported second-quarter revenue of $15 billion, with AI semiconductor growth offset by slower recovery in non-AI segments.

Lululemon cut its profit forecast for the year due to higher costs from U.S. tariffs and weak demand amid rising competition, causing its shares to drop 22% in after-hours trading. Despite introducing new product lines, the company faced lower store traffic and economic uncertainty, prompting modest price increases and cost-cutting measures.

Stablecoin issuer Circle Internet saw its shares more than double on their NYSE debut, closing up 168% at $83.23 and valuing the company at nearly $18 billion, boosting the crypto IPO market. The flotation highlights growing mainstream acceptance of digital assets and Circle’s efforts to integrate its USDC stablecoin into the financial system.

Tesla shares plunged 14.3% after President Trump publicly criticised CEO Elon Musk over opposition to a Trump-backed spending bill, threatening to pull government contracts and subsidies. Musk fired back on social media, accusing Trump of lying and highlighting the bill’s excessive spending, while announcing SpaceX will begin decommissioning its Dragon spacecraft amid escalating tensions.

Procter & Gamble will cut 7,000 jobs and exit some product categories in a two-year restructuring plan to navigate economic uncertainty worsened by U.S. tariffs. The company expects a $600 million tariff hit in 2026 and plans to offset this with price rises, cost-cutting, and organisational simplification, focusing on core brands like Tide and Pampers.

Delta Air Lines warned tariffs on imported planes could force it to cancel orders and cut flights serving 10 million customers, harming U.S. and foreign manufacturers. Industry groups urged the Trump administration to avoid new tariffs, warning they could disrupt the aerospace supply chain and harm U.S. competitiveness.

Chinese electric vehicle maker BYD plans to nearly triple its dealership network in South Africa by next year to boost market share amid growing competition and rising demand for new energy vehicles. Despite challenges like limited charging infrastructure and high import duties, BYD aims to educate consumers and capitalise on South Africa’s position as Africa’s largest automotive market.

HSBC Chairman Mark Tucker will step down by September 30 to become chairman of AIA Group in Hong Kong, returning to the insurance sector. Brendan Nelson will act as interim chairman while HSBC conducts a search for a permanent replacement, with former Citigroup president Jamie Forese among the potential candidates.

Kering is in exclusive talks with buyout group Ardian to sell a stake in its prime Fifth Avenue property as part of a broader strategy to reduce its €10.5 billion net debt through real estate transactions. The luxury group aims to retain co-ownership of key retail locations while raising funds, having already sold a majority stake in Paris properties to Ardian earlier this year.

Robinhood reported strong growth in May 2025, with total platform assets surpassing $250 billion and significant increases in trading volumes across equities, options, and crypto, including a notable rise in after-hours trading activity. The company also saw margin balances and cash sweep balances reach record highs, reflecting robust user engagement despite the end of customer promotions.

Mizuho upgraded Visa to Outperform and raised its price target to $425, citing significant room for growth as U.S. card penetration remains around 75%, below previous estimates. The brokerage expects another decade of domestic growth supported by a reversal in spending trends and strong performance in markets like Canada and the Nordics.

Jefferies downgraded Chewy to Hold from Buy, citing stretched valuation after a 41% rally this year and limited near-term earnings upside despite strong execution and rising app usage. The firm lowered its price target to $43, expecting only modest guidance increases and no significant estimate upgrades due to a lack of macro catalysts.

Goldman Sachs upgraded Bayer to "buy," highlighting strong operational performance and disciplined cost management in both the Crop Science and Pharma divisions. The firm expects positive earnings revisions ahead, supported by potential upside from upcoming litigation outcomes and promising pharmaceutical catalysts.

Upcoming data and events

Today’s focus is on key U.S. economic data, including nonfarm payrolls, average hourly earnings, and the unemployment rate. These figures are expected to influence market sentiment and expectations around monetary policy.

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