(Bloomberg) — Global stock markets weakened on Friday as a global computer systems outage hit travel, trading and banking services and threatened to worsen a selloff in technology shares.
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Cybersecurity company CrowdStrike’s shares fell as much as 21% in premarket trading on November 14 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.” Microsoft shares fell 2% after the company said it had resolved an earlier outage for its cloud services.
However, the Nasdaq 100 and S&P 500 indexes pared the previous day’s losses to trade just 0.1% lower. In Europe, the Stoxx 600 index fell 0.5%, marking its fifth consecutive day of declines. Shares in airlines including Air France-KLM and Ryanair Holdings fell sharply as flights were grounded or delayed. LSE Group, which operates the London Stock Exchange, lost some of its shares after saying technical issues were preventing it from releasing news.
The turmoil came near the end of a week when the tech-heavy Nasdaq slumped more than 3% as investors pulled out of fast-grossing big-cap stocks and shifted money to smaller companies. The Russell 2000 Index was up 2.3% for the week.
Rajeev de Mello, chief investment officer at Gama Asset Management, said the market sell-off caused by the power outage is unlikely to last long, adding that investors “can take advantage of these sell-offs to buy risk, especially in the summer trading and on Fridays when liquidity is low.”
“But the rotation in equity sectors has been intense and could continue for a little longer,” he added.
The recent move into smaller, lower-valued sectors has been fueled by signs the Federal Reserve will cut interest rates in September — a view cemented by data on Thursday showing the biggest increase in jobless claims since early May — and the possibility of greater protectionism with a possible Donald Trump presidency.
“Looking at the bigger picture, the Fed heading for rate cuts and the rising odds of a Trump presidency are both risk positives,” said Mohit Kumar, strategist at Jefferies International. “But it does mean investors will be rethinking their asset and sector allocations heading into the summer, as more heavily positioned sectors have been hit hard by the correction.”
As quarterly profits trickled out, German electronics maker Sartorius AG tumbled 13% after it cut its full-year outlook. Computer-game maker Ubisoft Entertainment SA slumped more than 8% after reporting mixed full-year targets, and gaming company Evolution AB also tumbled after its profits fell short of expectations.
In the United States, shares in video streaming giant Netflix fell in pre-market trading after the company provided weaker-than-expected guidance.
On the same day, the MSCI Asia Pacific Index fell more than 1%, its biggest weekly drop in three months, as concerns about U.S. restrictions on sales to China weighed on semiconductor stocks.
Major events this week:
Some of the key market developments:
stock
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The Stoxx Europe 600 index was down 0.5% as of 11:53 a.m. London time.
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S&P 500 futures little changed
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Nasdaq 100 futures fell 0.1%
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Dow Jones Industrial Average futures fell 0.2%.
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MSCI Asia Pacific Index fell 1.4%
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The MSCI Emerging Markets Index fell 1.6%.
currency
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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 almost unchanged at 157.44 yen to the dollar.
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The offshore yuan was little changed at 7.2844 yuan per dollar.
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The British pound fell 0.2% to $1.2915.
Cryptocurrency
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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 the 10-year Treasury note was little changed at 4.20%.
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German 10-year government bond yields rose 1 basis point to 2.44%.
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UK 10-year government bond yields rose 3 basis points to 4.09%.
merchandise
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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 assistance from Bloomberg Automation.
–With assistance from Zhu Lin, John Cheng, Winnie Hsu, and Divya Patil.
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