English
Trump-Musk fallout provides entertainment ahead of US payrolls
While compelling viewing, the Trump-Musk spat has limited relevance for global markets, especially ahead of today’s payrolls figures in the US.
A bromance ends
The ‘bromance’ between Trump and Elon Musk has come to an end it seems, as most people suspected it would.
The two men, who had been such close allies in the election campaign and in the early months of the administration, took to social media to vent their differences after comments from Trump in a press conference regarding Elon’s departure from the US government.
Tesla’s shares were the big mover on the day, slumping to their lowest level in a month and suffering their biggest one day fall in history.
Does it matter much for investors? For those focused on the longer-term picture, probably not. Tesla’s travails are of course important for shareholders, and given its status as an iconic stock it could have some short-term impact. But the main focus for most investors will continue to focus on the outlook for the global economy and earnings, and wait to see whether the tariff turmoil of the past two months has begun to have a sustained impact on activity.
For Tesla shareholders, the outlook is trickier to parse. Musk has burnt a lot of goodwill among non-MAGA voters in the US, and indeed in other countries around the world. Can he recover at least some of this lost ground now, or are people permanently alienated from him and his car company? Sales data from the UK showed that sales were down 45% in May, a figure replicated in other key markets.
The next earnings report comes on 22 July. Six weeks is a long time in markets, and the shares might be able to recover in the meantime, but they look bruised after yesterday’s drop.
Payrolls still to come
Of course, last night’s public argument was a great entertainment, but a distraction from the real business of the week, namely non-farm payrolls (NFPs).
Last month’s 177,000 figure is expected to be followed up by growth of 130,000 according to a Reuters. Wednesday’s ADP report pointed to weak job growth, but the link between the two is tenuous at best, and should not be taken as a firm indication that today’s figures will be poor too.
A lot of attention will be paid to the wage growth figures too. Reuters polling expects a mixed picture; pay packets are expected to rise 0.3% from last month’s 0.2%, but slow to 3.7% from 3.8% on an annual basis.
This week has seen markets react positively to bad data, or at least look through it, perhaps on the basis that activity will recover in subsequent months now that tariffs have been paused. This is not a given for today however, and with the weekend looming stocks may drop as investors trim risk in the final session of the week.
Connect with us
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
