Stock Markets See Mixed Reactions Amid US-China Talks and Elon Musk's Fallout with Trump
U.S. equity market slightly escalates due to positive signs in U.S.-China trade relations, Tesla stocks decline.
American stock indices experienced moderate growth on Thursday, inspired by optimistic developments in US-China trade relations. The Dow Jones Industrial Average climbed by 60 points, or 0.15%, with the S&P 500 inching up 0.02%, and the tech-heavy Nasdaq edged up slightly by 0.01%.
Markets remained volatile as traders navigated news of a "very good phone call" between US President Donald Trump and Chinese President Xi Jinping. The leaders disagreed on several issues, including rare earth minerals, a strategic trade point. However, both countries agreed to resume negotiations in person soon, given their significant economic interdependence.
Meanwhile, Tesla shares witnessed a 7.89% dip on Thursday following a public spat between CEO Elon Musk and President Trump. Previously, Musk, a former Trump advisor, voiced his disapproval of the President's proposed budget on social media, causing Trump to express "deep disappointment."
Tesla's meteoric rise post Trump's election was predicated on the assumption of favorable policies for Musk's ventures. However, as these hopes seem to dissipate, Tesla's stock price has plummeted from December's ATH of $479.86 to its current price of $303.99. Musk, who served as the head of the unpopular Department of Government Efficiency until May 28, stepped down amid heavy criticism.
A Look at Tesla's Market Capitalization Post-Musk's Controversy
The controversy between Musk and Trump resulted in a dramatic decline in Tesla's shares, with the stock plummeting 14% in a single day, erasing over $150 billion in market value. Subsequently, Tesla's market capitalization dropped by 29.3% to $917 billion, marking it as the year's worst-performing large-cap stock. Despite a minimal recovery following a White House intervention, the overall impact on Tesla's stock has been profound, intensifying concerns about the slowing electric vehicle demand and Musk's questionable ties to far-right groups [1].
- Amidst the stock market fluctuations, the crypto world also experienced fluctuations, especially with Bitcoin, as it moved up slightly following the US-China trade developments and Elon Musk's fallout with Trump.
- The Initial Coin Offering (ICO) market saw a mixed response, with some investors viewing the political tensions as a potential threat, while others saw it as an opportunity to invest in new crypto projects.
- Decentralized Finance (DeFi) platforms, such as MakerDAO and Uniswap, saw increased activity, as users sought alternatives to traditional finance systems that may be affected by political events.
- XRP, the third-largest cryptocurrency by market capitalization, remained relatively stable, as its ties to traditional finance and banks may offer some protection against political volatility.
- The general news outlets reported the impact of politics on the stock market, technology, and finance sectors, with discussions about the effect of the ongoing US-China trade disputes, Tesla's falling market capitalization, and the implications for the broader cryptocurrency market.
