Stock markets jolted by Musk’s economy and jobs warning

LONDON, June 3 (Reuters) – Wall Street was tipped for a weaker open on Friday, bucking share price gains in Europe and Asia after warnings on the economic outlook from Tesla Chief Executive Elon Musk who outlined plans to lay off 10% of his staff.

Markets are on edge ahead of crucial monthly jobs data in the United States and signs that a combination of high oil prices and higher interest rates are starting to tighten conditions in the global economy and the United States.

But while world stocks are clinging to a slender gain, Wall Street futures turned lower on the day after Musk said he had a “super bad feeling” about the economy. In an email to executives seen by Reuters, he said he wanted to cut about 10% of jobs at the electric carmaker read more .

Musk’s message came shortly after Jamie Dimon, Chairman and Chief Executive of JPMorgan Chase, described the challenges facing the U.S. economy as akin to a “hurricane”.

Shares in the electric carmaker were down 4.2% in pre-market trade, while futures in the tech-heavy Nasdaq turned negative after the Reuters report, to slide 1.1%. S&P 500 futures were down 0.7% , .

A pan-European equity index was little changed (.STOXX) while MSCI’s global equity benchmark rose by 0.1%, still headed for a second week of gains (.MIWD00000PUS).

“(Markets) will clearly read this message negatively at first blush; Tesla is trying to be ahead of a slower delivery ramp this year and preserve margins ahead of economic slowdown,” said Dan Ives, managing director for equity research at Wedbush Securities, said on Twitter.

Musk’s comments came just before the 1230 GMT release of the U.S. Labor Department’s employment report, which investors will scan for hints of a slowdown in the jobs market.

A Reuters poll of analysts expects 325,000 nonfarm payrolls were added in May, with average earnings slowing to 5.2% on a yearly basis, from 5.5% in April and any figures worse than that could fan hopes the Fed will slow or even pause interest rate hikes in the second half of the year.

Many investors are inclined to wait and see.

“There is a risk of recession yes, and people need to prepare but then, you need to see numbers heading in that direction and so far there are none,” said Francois Savary, chief investment officer of Swiss wealth manager Prime Partners.

“If we have a significant deterioration of U.S. labour markets over the summer, then I would say there is a risk of recession next year but for the time being we don’t see this.”

Private sector payrolls undershot expectations, data from payrolls processor ADP showed on Thursday, however other data show job openings still near record highs and falling jobless claims.

Balancing the growth and inflation outlook is the task central banks are juggling, with inflation at multi-decade or record highs.

There was little relief from oil prices, with Brent crude declining less than 1% in response to an offer from OPEC+ producers…