(Bloomberg) — Global equities extended declines as worldwide computer systems outages threatened to exacerbate a pullback in technology stocks.
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Cybersecurity firm Crowdstrike Inc. slid as much as 14% in US premarket trading after warning its software was causing computer systems to crash. Microsoft shares dropped 2% in US premarket trading, though it said it had resolved the cloud-services outage that was blamed for disrupting flights and banks globally. Shares in United Airlines Holdings and Delta Air Lines Inc. slipped as flights were either grounded or delayed.
Contracts on the Nasdaq 100 and S&P 500 slipped 0.2%, paring earlier losses. In Europe, the Stoxx 600 index lost 0.5%, falling for a fifth day. Shares of LSE Group Plc, which operates the London stock exchange, dropped 1% after it reported global technical issues were preventing news from being published. Air France-KLM, Ryanair Holdings and other airlines also declined.
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. A rout in chip stocks extended amid concern over fresh US restrictions on sales to China. Shares of Taiwan Semiconductor Manufacturing Co. fell for a third day.
Key events this week:
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.6% as of 10:41 a.m. London time
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S&P 500 futures fell 0.3%
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Nasdaq 100 futures fell 0.4%
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Futures on the Dow Jones Industrial Average fell 0.3%
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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 rose 0.1%
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The euro fell 0.2% to $1.0879
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The Japanese yen was little changed at 157.36 per dollar
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The offshore yuan was little changed at 7.2812 per dollar
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The British pound fell 0.3% to $1.2909
Cryptocurrencies
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Bitcoin fell 0.2% to $63,668.13
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Ether fell 0.9% to $3,384.78
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 was little changed at 2.43%
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Britain’s 10-year yield advanced one basis point to 4.08%
Commodities
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Brent crude fell 0.1% to $85.01 a barrel
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Spot gold fell 1.2% to $2,415.06 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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