By: Swarnalata
Published on: Jun 06, 2025
FTSE 100 LIVE: Stocks Mixed as Traders Navigate Trump-Musk Feud and Trade War Developments
London, June 6, 2025 – The FTSE 100 (^FTSE) and broader European stock markets opened with mixed performance on Friday as investors grappled with a high-profile clash between U.S. President Donald Trump and Tesla (TSLA) CEO Elon Musk, alongside easing tensions in the U.S.-China trade war. The volatility in Tesla’s stock, which plummeted 14% in a single session, reverberated across global markets, while a recent call between Trump and Chinese President Xi Jinping offered some relief to trade war anxieties. Here’s a deep dive into the factors shaping today’s market dynamics and what investors can expect moving forward.
The most striking development in global markets came from the U.S., where Tesla shares nosedived 14% after a public feud between President Trump and Elon Musk escalated. The row, which erupted over Trump’s threat to eliminate government subsidies and contracts for Tesla, wiped out approximately $150 billion (£110 billion) in market value in one of the company’s worst trading days in months. Trump accused Musk of going “CRAZY!” in response to the proposed removal of electric vehicle (EV) subsidies, a policy shift that could significantly impact Tesla’s bottom line.
Chris Weston, head of research at Pepperstone, described the market reaction as a “sell first, ask questions later” frenzy. “The selling in Tesla stock on the day has been wholly impressive, with 285 million shares traded – the most since January 2023,” Weston noted. The options market was equally chaotic, with over 4 million put options changing hands, four times the 20-day average. This intense selling pressure reflects investor concerns about Tesla’s reliance on government incentives and the potential financial fallout from Trump’s policy stance.
The dispute has broader implications for the EV sector, which has benefited from substantial subsidies in the U.S. and other markets. Trump’s rhetoric suggests a potential rollback of green energy initiatives, which could ripple across companies like Rivian (RIVN), Lucid (LCID), and others in the renewable energy space. For European investors, this development raises questions about the stability of EV-related investments, particularly as the region pushes its own green agenda.
While the Musk-Trump feud dominated headlines, a more optimistic development emerged from U.S.-China relations. On Thursday, President Trump held a call with Chinese President Xi Jinping, marking their first direct communication since Trump initiated a trade war with Beijing in February 2025. Chinese state media reported that the call was requested by the White House, signaling a potential de-escalation in tensions.
During the call, Trump extended an invitation to Xi to visit the U.S., while Xi reciprocated with an invitation for Trump to visit China. “He invited me to China, and I invited him here,” Trump said while meeting German Chancellor Friedrich Merz in the Oval Office. “We both accepted, so I will be going there with the first lady at a certain point, and he will be coming here, hopefully with the first lady of China.” This diplomatic overture has sparked cautious optimism among investors, who have been wary of the economic fallout from escalating tariffs and trade restrictions.
The trade war, which has seen tit-for-tat tariffs and supply chain disruptions, has weighed heavily on global markets throughout 2025. For European markets, particularly export-heavy economies like Germany, any sign of thawing relations between the world’s two largest economies is a welcome development. However, analysts caution that the road to a stable trade environment remains uncertain, with Trump’s unpredictable policy approach keeping markets on edge.
Against this backdrop, European stock markets displayed a mixed performance on Friday. London’s FTSE 100 (^FTSE) edged up 0.2% in early trading, buoyed by gains in defensive sectors like utilities and consumer staples. However, the index’s gains were tempered by weakness in mining and energy stocks, which remain sensitive to global trade dynamics and commodity price fluctuations.
Germany’s DAX (^GDAXI) slipped 0.3%, reflecting concerns about the country’s export-driven economy amid ongoing trade uncertainties. The CAC 40 (^FCHI) in Paris also dipped 0.2%, with luxury goods and automotive sectors under pressure. The pan-European STOXX 600 (^STOXX) hovered near the flatline, as investors adopted a wait-and-see approach.
The mixed performance in Europe reflects the complex interplay of global and regional factors. While the Trump-Xi call provided some relief, the uncertainty surrounding U.S. policy under Trump’s administration continues to create headwinds. Additionally, the Tesla sell-off has raised concerns about the broader technology and renewable energy sectors, which are significant components of European indices.
Across the Atlantic, Wall Street appeared poised for a positive start. Futures for the S&P 500 (ES=F), Dow Jones Industrial Average (YM=F), and Nasdaq (NQ=F) were all in positive territory, suggesting a rebound from recent volatility. The optimism in U.S. futures markets may be driven by the easing of trade war concerns and expectations of robust corporate earnings in key sectors.
However, the Tesla sell-off serves as a reminder of the risks posed by political rhetoric and policy shifts. Investors will be closely monitoring Trump’s next moves, particularly regarding EV subsidies and trade tariffs, as these could have far-reaching implications for U.S. and global markets.
As markets navigate this turbulent landscape, several factors will shape investor sentiment in the coming days and weeks:
For investors, the current environment demands a cautious yet opportunistic approach. Defensive stocks, such as those in utilities and healthcare, may offer stability amid the uncertainty. Meanwhile, sectors tied to global trade, such as industrials and materials, could face continued volatility until there’s greater clarity on U.S.-China relations.
Diversification remains key, with a focus on companies with strong fundamentals and limited exposure to U.S. policy risks. Additionally, investors may consider hedging strategies, such as options or ETFs, to mitigate downside risks in high-volatility sectors like technology and EVs.
The FTSE 100 and European markets are navigating a complex landscape shaped by the Trump-Musk feud and evolving U.S.-China trade dynamics. While the Tesla sell-off has sent shockwaves through global markets, the recent diplomatic overtures between Trump and Xi offer a glimmer of hope for de-escalation. As investors weigh these developments, the focus will remain on U.S. policy decisions, corporate earnings, and economic data for clues about the market’s next direction. For now, a cautious approach with an eye on diversification and risk management will be critical for navigating this volatile environment.
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