Stock Markets Struggle as Tech Outage Hits Companies: Markets Wrap

(Bloomberg) — Global stocks struggled Friday as computer outages across the globe hit travel, trading and banking services, threatening to exacerbate a slide in technology stocks.

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Shares of cybersecurity company Crowdstrike Inc. fell 21% in premarket U.S. trading after it warned that its software was causing computer systems to crash. The company’s chief executive later said the problem had been identified and “a fix is ​​being deployed.” Shares of Microsoft Corp. fell 2%, even though it said it had resolved an earlier outage in its cloud computing services.

However, contracts on the Nasdaq 100 and S&P 500 erased earlier losses to trade just 0.1% lower. In Europe, the Stoxx 600 fell 0.5%, falling for a fifth straight day. Shares in Air France-KLM, Ryanair Holdings Plc and other airlines fell sharply as flights were grounded or delayed. LSE Group Plc, which operates the London Stock Exchange, clawed back some of its share price losses after saying technical issues were preventing the release of news.

The turmoil comes at the end of a week in which the tech-heavy Nasdaq fell more than 3% as investors pulled out of large-cap stocks and moved into smaller companies. The Russell 2000 rose 2.3% this week.

The losses inflicted on the market due to the power outage are unlikely to last, said Rajiv D’Mello, chief investment officer at Gamma Asset Management, adding that investors may “take advantage of such selling, especially in low-liquidity summer trading and on Fridays, to buy risk.”

“The equity sector cycle has been brutal and may continue for quite some time,” he added.

Recent moves into smaller, less valuable sectors have been accelerated by signs that the US Federal Reserve will cut interest rates in September – a view reinforced by data on Thursday showing the biggest increase in unemployment claims since early May – as well as the prospect of more protectionism under a possible Donald Trump presidency.

“From a big picture perspective, the Fed’s move to cut rates and the increased likelihood of a Trump win should be positive for risk,” said Mohit Kumar, a strategist at Jefferies International Ltd. “But it also means investors are rethinking their asset allocations and sectors as we head into the summer months. Sectors with heavier positions have suffered the most.”

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As quarterly earnings continued to pour in, shares in Sartorius AG fell 13% after the German electronics maker cut its full-year outlook. Computer game maker Ubisoft Entertainment SA dropped more than 8% after reporting mixed full-year targets, while game company Evolution AB also fell after its earnings missed expectations.

In the US, Netflix shares fell in pre-market trading after guidance from the video streaming giant fell short of expectations.

Earlier in the day, MSCI’s broadest index of Asia-Pacific stocks fell more than 1%, heading for its biggest weekly decline in three months, as concerns over U.S. restrictions on sales to China weighed on chip stocks.

Main events this week:

Some key movements in the markets:

Stores

• The Stoxx Europe 600 Index was down 0.5% as of 11:53 a.m. London time.

• S&P 500 futures were little changed.

• Nasdaq 100 futures fell 0.1%.

• Dow Jones Industrial Average futures fell 0.2%.

• The MSCI Asia Pacific Index fell 1.4%.

• The MSCI Emerging Markets Index fell 1.6%.

Currencies

• The Bloomberg Dollar Index was little changed.

• The euro fell 0.1% to $1.0884.

• The Japanese yen was little changed at 157.44 yen to the dollar.

• The offshore yuan was little changed at 7.2844 against the dollar.

• The pound fell 0.2% to $1.2915.

Cryptocurrencies

• Bitcoin rose 0.3% to $64,014.3

• Ether fell 0.4% to $3,399.97.

Bonds

• The yield on the 10-year US Treasury note was little changed at 4.20%.

• The yield on the 10-year German bond rose one basis point to 2.44%.

• The yield on the 10-year British bond rose three basis points to 4.09%.

Goods

• Brent crude fell 0.2% to $84.91 a barrel.

• Spot gold fell 1.3 percent to $2,412.16 an ounce.

This story was produced with the help of Bloomberg Automation.

–With assistance from Chu Lin, John Cheng, Winnie Hsu, and Divya Patel.

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