(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, June 5 (Reuters) - What matters in U.S. and

global markets today

Donald Trump's hotly anticipated meetings with the leaders

of the world's two other biggest economies ended up being

sideshows compared to his online bust-up with billionaire backer

Elon Musk.

It's Friday, so today I'll provide a quick overview of

what's happening in global markets and then offer you some

weekend reading suggestions away from the headlines.

Today's Market Minute

* White House aides scheduled a call between Donald

Trump and Elon Musk for Friday, Politico reported, after a huge

public spat that saw threats fly over government contracts and

ended with the world's richest man suggesting the U.S. president

should be impeached.

* U.S. President Donald Trump and Chinese leader Xi Jinping

confronted weeks of brewing trade tensions and a battle over

critical minerals in a rare leader-to-leader call on Thursday

that left key issues to further talks.

* China has signalled for more than 15 years that it was

looking to weaponise areas of the global supply chain, a

strategy modelled on longstanding American export controls

Beijing views as aimed at stalling its rise. The scramble in

recent weeks to secure export licences for rare earths shows

China has devised a better, more precisely targeted weapon for

the trade war.

* By any measure, the recent resilience of U.S. stocks is

remarkable, with Wall Street powering through numerous headwinds

to erase all its tariff-fueled losses and move into positive

territory for the year. Reuters columnist Jamie McGeever

explains why the rally may still have some juice left in it.

* There are some tentative early signs that weak thermal

coal prices are starting to boost import demand among Asia's

heavyweight buyers China and India. Read Reuters Columnist Clyde

Russell to find out more.

Trump-Musk bust-up smolders

For markets trying to navigate everything from creeping

signs of labor market weakness to the latest European Central

Bank easing, the spat between the U.S. president and the world's

richest man proved more than a distraction. It remains to be

seen if it overshadows the May payrolls report later on Friday.

The extraordinary sparring match drew in other major

political and business figures and included potentially seismic

accusations and threats. In turn, the share price of Musk's

Tesla plummeted almost 20% at one point, dragging Wall

Street stock indexes and crypto tokens deep into the red.

The public feud appeared to cool off somewhat overnight and

allowed stock futures to regain some lost ground. But the fact

that the spat overshadowed the other major events of the day was

another marker of this administration's unpredictability.

The substance of the row was over Trump's "one big

beautiful" fiscal bill that Musk thinks is a "disgusting

abomination" due to the amount of spending. The bill, which has

yet to be passed by the Senate, is expected to add $2.4 trillion

to the U.S. debt over the next decade, based on CBO estimates.

The vast bulk of this will likely be incurred over the next four

years.

In the background, the call between Trump and China's

President Xi Jinping delivered no breakthroughs in the trade row

apart from warmer words and an agreement to resume talks. The

Oval Office meeting with Germany's Chancellor Friedrich Merz was

relatively positive about trade and diplomatic issues.

Earlier in the day, the ECB cut rates again as expected and

suggested that there may be a pause at its next meeting and that

it could be near the end of its easing cycle now that 'real'

inflation-adjusted rates are back near zero. The euro hit

a six-week high on Thursday regardless, although it gave back

those daily gains today.

Rising weekly U.S. jobless claims, meantime, cast a shadow

over today's release of the May employment report. Consensus

forecasts are for a slowdown in payroll growth to 130,000.

Treasury yields, which ebbed and flowed all day

on the conflicting signals from the trade meetings and stock

gyrations, are back hovering at the week's lows ahead of the

jobs report.

Even though Federal Reserve officials continue to signal

caution about the uncertain outlook ahead, markets are now

priced for a resumption of Fed cuts by September.

Into the already confusing mix, the Treasury released its

annual report on potential currency manipulation overseas,

adding Switzerland and Ireland to its watchlist, which already

includes China, Japan, Germany, South Korea, Taiwan, Singapore

and Vietnam.

The list likely carries more heft than usual amid multiple

tense trade negotiations. Markets assume the U.S. may pressure

other countries to let their currencies appreciate versus the

dollar as part of deals to avert severe tariffs being re-imposed

next month.

The Swiss National Bank responded on Friday by saying it

would intervene in currency markets where necessary to keep

inflation on track. Intervention to cap a super-strong franc has

been a critical monetary tool used over the past decade and may

need to be tapped again now that Swiss inflation has returned

negative just as the SNB's key interest rate is set to return to

zero in June.

Elsewhere, China's yuan slipped against the dollar while

falling to a near two-year low versus its major trading partners

on Friday as the Trump-Xi call fell short of many expectations.

Stock markets overseas were mixed on Friday as Wall Street

remained on edge and the U.S. jobs report loomed.

In the euro zone, first-quarter GDP was revised higher to

show twice the growth originally estimated: 0.6%

quarter-on-quarter, leading to an annual rate of 1.5%.

India's central bank cut key rates by a larger-than-expected

50 basis points to 5.5%, its steepest cut in five years. It also

slashed its cash reserve ratio - funds that banks are required

to hold - by 100 bps to 3% in a surprise move aimed at boosting

lending and speeding up policy transmission.

In single stocks, Tesla shares recovered around 5% in

Frankfurt on Friday, having closed down 14% in New York

yesterday amid the Trump-Musk spat. It lost about $150 billion

in market value yesterday, which caused the erstwhile member of

the 'Magnificent Seven' megacaps to drop to ninth in the list of

most-valuable firms behind Broadcom ( AVGO ) and Berkshire Hathaway.

Broadcom's ( AVGO ) shares, however, fell 4% in extended

trading overnight as its forecast-beating earnings seemed to

underwhelm the Street.

In Bank of America's weekly tally of fund flows, U.S. stocks

saw outflows of $7.5 billion, the third week of exits, while

European shares saw inflows of $2.6 billion, the eighth week of

inflows.

Weekend reading suggestions

* 'BLUE BONDS': European countries should seize the moment

to boost the size and liquidity of jointly-issued euro sovereign

debt, and a solution could be to replace a proportion of the

stock of national bonds with senior Eurobonds, or 'blue bonds'.

So says a 'working document' from Peterson Institute senior

fellow and former IMF chief economist Olivier Blanchard in a

paper jointly written with Citadel's Angel Ubide.

* NUCLEAR BLIND SPOTS: United Nations nuclear watchdogs

appear to have lost track of some critical elements of Iran's

nuclear activities since U.S. President Donald Trump ditched a

2015 deal that imposed strict restrictions and close supervision

by the International Atomic Energy Agency. Reuters Francois

Murphy and John Irish report on key blind spots that include not

knowing how many centrifuges Iran possesses or where the

machines and their parts are produced and stored.

* OCEAN ECONOMY: Trade in the global 'ocean economy' hit as

much as $2.2 trillion in 2023, about 7% of total world trade,

but this trade is increasingly threatened by climate change and

environmental problems, the United Nations trade and development

arm UNCTAD showed in a report this week. The ocean economy grew

faster than the world economy at large in the five years to 2020

and an estimated 100 million jobs depend on it.

* 'TRUMP DOCTRINE': The emerging foreign policy under

President Donald Trump resembles a 'look the other way' doctrine

or a 'none of our business' doctrine, argues former George W.

Bush State Department official Richard Haass on Project

Syndicate. "The U.S. sought to change the world, annoying some

and inspiring others. Those days are gone, in some ways for

better, but mostly for worse. The US has changed. It is coming

to resemble many of the countries and governments it once

criticized."

* MAGNETIC FEW: A small team in China's Ministry of Commerce

decides the fate of the global auto industry, one rare earth

magnet export permit at a time. China holds a near-monopoly on

rare earth magnets, a key component in electric vehicle motors,

and it added them to an export control list in April as part of

its trade war with the United States. Reuters' Laurie Chen and

Lewis Jackson show how it falls to the Bureau of Industrial

Security and Import and Export Control, part of China's Ministry

of Commerce, to review export permits for the rare earth

magnets, vital for car motors, wind turbines and even U.S. F-35

fighter jets.

* FINANCE AND AI: Artificial intelligence advances in the

financial sector offer enhanced data analysis, risk management

and capital allocation, but there are problems too, according to

a paper on CEPR's VoxEU website. As AI systems become more

widespread, they introduce challenges for regulators tasked with

balancing the benefits of innovation with the need for financial

stability, market integrity, consumer protection and fair

competition.

* DRONE ATTACK: Ukraine's 'Operation Spider's Web' last

weekend used smuggled drones to attack bomber aircraft deep

inside Russia, and the 'remarkable event' could affect the

future of conflict, argues Council on Foreign Relations fellow

Michael Horowitz. The attack "clearly shows that even targets

deep in a country's territory could now be at risk".

* IMF EUROPE: The case for closer European economic

integration has become more compelling as external challenges

multiply, according to Alfred Kammer, director of the

International Monetary Fund's European Department. Stressing the

need for the completion of the single market, Kammer said

capital markets integration has been too slow and that

cross-border flows have been frustrated by persistent

fragmentation. "If history is a guide, Europe can turn adversity

to advantage."

* ALPINE TRUSTS: Liechtenstein is examining tightening

control of scores of Russian-linked trusts abandoned by their

managers under pressure from Washington. Reuters' John O'Donnell

and Oliver Hirt cite sources in reporting that the country, one

of the world's smallest and richest, is home to thousands of

low-tax trusts, hundreds with links to Russians.

Chart of the day

Supply chain stress ticked up in May, data from the Federal

Reserve Bank of New York said on Thursday. The bank noted that

its Global Supply Chain Pressure Index for May rose to 0.19 from

-0.28 in April, only the second time it stood in positive

territory this year and the highest reading since the 0.20 seen

in August of last year. Although the index remains subdued

compared to the post-pandemic surge, growing concerns about the

impact of the tariff war - particularly the impact of China's

restrictions on rare earth and minerals exports on the global

auto industry - will ensure policymakers keep a close eye on

these pressures for any signs of re-emerging inflation.

Today's events to watch

* U.S. May employment report (8:30 AM EDT), April consumer

credit (3:00 PM EDT); Canada May employment report (8:30 AM

EDT)

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.