(Bloomberg) — Global equities struggled on Friday as worldwide computer systems outages hit travel, trading and banking services, threatening to exacerbate a pullback in technology stocks.
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Cybersecurity firm Crowdstrike Inc. plunged as much as 21% in US premarket trading after warning its software was causing computer systems to crash. Its chief executive later said the issue had been identified and “a fix was being deployed.” Microsoft Corp. shares dropped 2%, though it said it had resolved an earlier cloud-services outage.
However, contracts on the Nasdaq 100 and S&P 500 indexes pared earlier losses to trade just 0.1% lower. In Europe, the Stoxx 600 index was down 0.5%, slipping for a fifth day. Shares in Air France-KLM, Ryanair Holdings Plc and other airlines fell heavily as flights were either grounded or delayed. LSE Group Plc, which operates the London stock exchange, recouped some of its share-price losses triggered after it said technical issues were preventing news from being published.
The disruptions come toward the end of a week that’s seen the tech-heavy Nasdaq shed more than 3%, as investors pulled out of high-flying megacap names and rotated into smaller companies. The Russell 2000 index has risen 2.3% this week.
Market losses triggered by the outages are unlikely to last, said Rajeev De Mello, chief investment officer at Gama Asset Management, adding investors could “take advantage of such selloffs, especially in lower liquidity summer trading, and on Friday, to buy risk.”
“However, the equity sector rotation has been brutal and could continue somewhat longer,” he added.
The recent moves into smaller, lower-valuation sectors were precipitated by signs the Federal Reserve will cut interest rates in September — a view cemented by Thursday’s data showing the biggest jobless claims increase since early May — as well as the likelihood of more protectionism under a potential Donald Trump presidency.
“From a big-picture perspective, both the Fed moving towards a rate cut and Trump odds increasing should be risk positive,” said Mohit Kumar, a strategist at Jefferies International Ltd. “But it also meant that investors reconsider their asset and sector allocation as we head into the summer months. Sectors with heavier positioning suffered in the adjustment.”
As quarterly earnings continued to trickle in, Sartorius AG plunged 13% after the German electronics maker lowered full-year guidance. Computer-games maker Ubisoft Entertainment SA slid more than 8% after mixed full-year targets, while gaming firm Evolution AB also tumbled after its earnings missed estimates.
In the US, Netflix Inc. slipped in premarket trade after guidance from the streaming-video giant missed expectations.
Earlier in the day, MSCI’s Asia Pacific Index declined more than 1%, set for its biggest weekly drop in three months, as fears of US restrictions on sales to China weighed on chip stocks.
Key events this week:
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.5% as of 11:53 a.m. London time
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S&P 500 futures were little changed
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Nasdaq 100 futures fell 0.1%
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Futures on the Dow Jones Industrial Average fell 0.2%
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The MSCI Asia Pacific Index fell 1.4%
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The MSCI Emerging Markets Index fell 1.6%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.1% to $1.0884
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The Japanese yen was little changed at 157.44 per dollar
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The offshore yuan was little changed at 7.2844 per dollar
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The British pound fell 0.2% to $1.2915
Cryptocurrencies
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Bitcoin rose 0.3% to $64,014.3
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Ether fell 0.4% to $3,399.97
Bonds
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The yield on 10-year Treasuries was little changed at 4.20%
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Germany’s 10-year yield advanced one basis point to 2.44%
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Britain’s 10-year yield advanced three basis points to 4.09%
Commodities
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Brent crude fell 0.2% to $84.91 a barrel
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Spot gold fell 1.3% to $2,412.16 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Zhu Lin, John Cheng, Winnie Hsu and Divya Patil.
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