Live: ASX set to slip after Trump-Musk feud triggers sell-off on Wall Street
A very public spat between Donald Trump and Elon Musk has sent shockwaves through financial markets, overshadowing trade diplomacy and fuelling a late-session sell-off on Wall Street.
The tech-heavy Nasdaq bore the brunt of the decline, tumbling 0.83%, dragged down by a 14% plunge in Tesla shares after the former US President threatened to axe federal subsidies in retaliation for Musk’s criticism of his flagship tax and spending bill — the so-called “Big, Beautiful Bill.”
That falling-out, coupled with disappointing economic data and nervousness around US-China trade talks, saw the broader S&P 500 fall 0.53% and the Dow slip 0.25%t.
“This Trump-Musk spat sort of exemplifies the uncertainty around economic policy,” said Thomas Martin, senior portfolio manager at GLOBALT in Atlanta.
“People are guessing which way the wind is blowing — and the wind keeps shifting.”
Investors had initially shrugged off the drama after Trump and Chinese President Xi Jinping held a phone call and agreed to keep talking on trade — a sign of de-escalation in tensions between the world’s two biggest economies.
But the market couldn’t ignore the growing list of red flags.
US jobless claims hit their highest level since October. Challenger layoffs soared 47 per cent year-on-year.
Imports plunged more than 16% — a figure economists say reflects the unpredictable impact of Trump’s tariff regime. The result: the narrowest U.S. trade deficit since November 2023.
For some, the downbeat data could be a silver lining.
“With some of the more benign inflation numbers coming through, and jobless claims rising, the Fed might feel more comfortable cutting rates more than once this year,” said Matthew Keator from the Keator Group.
The European Central Bank, meanwhile, delivered a widely anticipated rate cut of 25 basis points — its first in nearly five years — but ECB President Christine Lagarde warned that a pause in its easing cycle could be on the cards this summer.
In response, European markets gave up some early gains. The pan-European STOXX 600 added just 0.16% by the close, while Wall Street losses weighed on global equities more broadly.
The MSCI gauge of global shares slipped 0.28%, despite gains across emerging markets and Asia-Pacific, with Japan’s Nikkei shedding 0.51%.
Bond yields in the U.S. rose, with investors cautiously optimistic about trade talks. The yield on 10-year Treasuries nudged up to 4.4%, and the 2-year yield — sensitive to Fed policy expectations — climbed nearly six basis points to 3.93%.
The U.S. dollar pared earlier gains on the back of soft data and hints of ECB caution, while crude oil prices advanced on hopes of trade détente, shrugging off a surprise jump in U.S. inventories and Saudi price cuts.
Brent rose to $US65.34 a barrel, and US crude settled at $US63.37.
Even gold — a traditional safe haven — gave up ground. Spot prices fell 0.56% to $US3,356 an ounce.
With Trump back in the headlines, Musk offside, and the Fed under pressure, investors appear caught between FOMO and fear.
“People want to own stocks because they’re scared of missing out,” said Martin. “But they also don’t want to hold the bag if it all turns into a disaster.”