Il Nuovo Postiglione - Stocks mostly slide as global tech outage rattles investors

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Stocks mostly slide as global tech outage rattles investors

ECONOMY 19.07.2024

Stocks mostly slide as global tech outage rattles investors / Photo: Robin Utrecht - ANP/AFP

Stock markets mostly slid Friday after computer systems crashed worldwide, with sentiment also hit by US election uncertainty and Chinese economic worries.

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The London Stock Exchange saw a delayed start to trading due to the glitch -- the result of an update with a bug -- which also affected airports, airlines, trains, banks, shops and even doctors' surgeries.

The calculation of London's blue-chip FTSE 100 was frozen during afternoon trading.

"Risk aversion is taking hold yet again, with news that banks, airports, train companies, TV stations including Sky News, stock exchanges including the LSE, Microsoft's cloud services and cyber security services have all been hit by major online outages," said Kathleen Brooks, research director at XTB.

The crash was caused by an update of CrowdStrike antivirus software on Microsoft's cloud computing service.

"We expect this outage to hurt the big tech companies who are also affected; Microsoft's share price is down."

Microsoft's share price fell 1.4 percent at the start of trading in New York.

Shares in CrowdStrike, which has already issued a software fix, tumbled 14.2 percent.

Wall Street's main indices opened lower, but the S&P 500 and Nasdaq Composite pushed into positive territory after 10 minutes of trading.

Stocks in Europe were lower in afternoon trading and most Asian markets closed down.

Aviation officials in the United States briefly grounded all planes and airlines elsewhere cancelled or delayed flights, as systems running Microsoft Windows crashed.

"The world grinding to a halt because of a global IT meltdown shows the dark side to technology and that relying on computers does not always make life easier," noted Dan Coatsworth, investment analyst at stockbroker AJ Bell.

Prior to the news, investors were already on edge after a report said the White House was considering a crackdown on firms supplying chip technology to Beijing.

They were also nervous after Donald Trump's call for Taiwan to pay Washington for help defending itself against China.

Markets have been enjoying a healthy run-up as Federal Reserve officials have lined up in recent days to suggest they are ready to begin reducing rates.

However, the tech sector -- which has led the surge in stocks this year -- has taken a hefty hit after the report of the White House's warning over supplying China and Trump's remarks about Taiwan, home to some of the world's biggest chip producers.

The tech stock rally has also resulted in excessive valuations, according to many analysts, but investors are apparently mostly shifting into other sectors rather than pulling money from the equity market.

But the broadest US stock market index, the Russell 2000, also fell sharply on Thursday.

"It appeared that investors were happier taking some profits following the week-long rotation out of tech and into value, than adding to their exposure," said David Morrison, senior market analyst at Trade Nation.

Patrick O'Hare at Briefing.com said: "market participants will be watching today's price action closely to see if there is a buy-the-dip inclination or a continued bid to take some money off the table."

There is also growing uncertainty over who will run against Trump in November, as calls for President Joe Biden to step aside continue to grow owing to questions about his health.

- Key figures around 1330 GMT -

New York - Dow: DOWN 0.3 percent at 40,535.29 points

New York - S&P 500: UP 0.2 at 5,553.51

New York - Nasdaq Composite: UP 0.2 percent at 17,897.34

London - FTSE 100: DOWN 0.5 percent at 8,161.28

Paris - CAC 40: DOWN 0.6 percent at 7,543.30

Frankfurt - DAX: DOWN 0.7 percent at 18,231.80

EURO STOXX 50: DOWN 0.6 percent at 4,841.25

Tokyo - Nikkei 225: DOWN 0.2 percent at 40,063.79 (close)

Hong Kong - Hang Seng Index: DOWN 2.0 percent at 17,417.68 (close)

Shanghai - Composite: UP 0.2 percent at 2,982.31 (close)

Euro/dollar: DOWN at $1.0889 from $1.0900 on Thursday

Pound/dollar: DOWN at $1.2923 from $1.2946

Dollar/yen: UP at 157.50 yen from 157.36 yen

Euro/pound: UP at 84.26 pence at 84.17 pence

West Texas Intermediate: DOWN 1.0 percent at $81.99 per barrel

Brent North Sea Crude: DOWN 0.9 percent at $84.35 per barrel

burs-rl

O.R.Lucchese--INP

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