A look at the day ahead in European and global markets from

Stella Qiu

It could be the most expensive breakup ever.

The bromance-turned-to-brawl between U.S. President Donald

Trump and billionaire Elon Musk sparked a 14% drop in Tesla

shares overnight, wiping out $150 billion in market value. Then

there's the tens of billions of dollars in SpaceX government

contracts that Trump has threatened to cut.

High-stakes political drama aside, investors have not

lost sight of the U.S. payrolls report looming later in the day,

after a run of soft economic data this week left markets wary of

a downside surprise.

Any unexpected weakness in the U.S. labour market could

be enough to get the Federal Reserve's policy-makers thinking

again about rate cuts, after sitting on their hands since

December to assess the inflationary impact of Trump's tariffs.

The Trump-Musk feud was not without wider consequences

for markets, though. Even bitcoin prices tumbled 4%

overnight as investors reckoned Trump's support should perhaps

not be counted on indefinitely.

Asian technology shares followed Wall Street lower, helping

to nudge most of the region's stock markets into negative

territory. Japan's Nikkei was an exception, rising 0.3%.

There were signs in the Asia morning on Friday that tempers

may be cooling down a bit, with Trump telling Politico that

"it's okay" when asked about the breakup and Tesla stocks

steadying in after-hours trading.

In the meantime, investors found little reason to cheer the

phone call on trade between Trump and Chinese President Xi

Jinping, which produced little more than an agreement to talk

further.

As for the U.S. payrolls, forecasts are centred on a rise of

130,000 jobs in May, with the unemployment rate holding steady

at 4.2%.

Fed funds futures imply little chance of a rate cut

until September, although a move at that time is about 90%

priced in with another expected in December.

Worries of a downside surprise on payrolls kept markets

subdued. Wall Street futures were mostly flat and

European markets are set for a lower open, with EUROSTOXX 50

futures down 0.2%.

In the currency markets, the euro rose to a

six-week high of $1.1495 overnight after the European Central

Bank cut rates but signalled it was nearing the end of its

policy easing cycle. Investors have given up on the chances of a

cut in July, while the final move is expected in December.

Key developments that could influence markets on Friday:

-- German industrial output, trade data for April

-- Eurozone retail sales for April

-- U.S. nonfarm payrolls for May