(Times Of Update) — Global stocks struggled Friday as global computer outages hit travel, trading and banking services, threatening to exacerbate a decline in technology stocks.
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Cybersecurity firm Crowdstrike Inc. fell 21% in premarket trading after warning that its software was causing computer system outages. Its chief executive later said the problem had been identified and “a fix is being deployed.” Shares of Microsoft Corp. fell 2%, although the company said it had fixed an earlier cloud services outage.
The Nasdaq 100 and S&P 500 indexes, however, pared their losses to fall just 0.1%. In Europe, the Stoxx 600 index fell 0.5% for a fifth straight day. Shares of Air France-KLM, Ryanair Holdings Plc and other airlines fell sharply as flights were either grounded or delayed. LSE Group Plc, which runs the London Stock Exchange, recovered some of its stock market losses triggered after it said technical problems were preventing the release of information.
The disruptions come at the end of a week in which the tech-heavy Nasdaq index lost more than 3% as investors shifted away from large-cap stocks to smaller companies. The Russell 2000 index gained 2.3% this week.
Market losses from the outages are unlikely to last, said Rajeev De Mello, chief investment officer at Gama Asset Management, adding that investors could “take advantage of these selloffs, particularly in the thin-liquidity summer trading, and on Friday, to buy risk.”
“However, the rotation in the equity sector has been brutal and could continue for a while longer,” he added.
Recent moves into smaller, less valued sectors have been precipitated by signs that the Federal Reserve will cut interest rates in September – a view reinforced by Thursday’s data showing the biggest increase in jobless claims since early May – as well as the likelihood of greater protectionism under a potential Donald Trump presidency.
“From a broader perspective, the Fed’s decision to cut rates and the increased odds of Donald Trump should be positive risk factors,” said Mohit Kumar, a strategist at Jefferies International Ltd. “But it also means investors need to reconsider their asset and sector allocations heading into the summer months. The most heavily positioned sectors have suffered from this adjustment.”
As quarterly results continued to roll in, Sartorius AG fell 13% after the German electronics maker lowered its full-year forecast. Video game maker Ubisoft Entertainment SA fell more than 8% after mixed annual guidance, while gaming company Evolution AB also fell after its results fell short of expectations.
In the United States, Netflix Inc. fell in premarket trading after the video streaming giant’s forecast fell short of expectations.
Earlier in the day, the MSCI Asia Pacific index fell more than 1%, set for its biggest weekly decline in three months, as fears of U.S. restrictions on sales to China weighed on chip stocks.
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