(Bloomberg) — Global stocks continued to fall as a global computer systems outage threatened to worsen a sell-off in technology shares.
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Cybersecurity company CrowdStrike Inc.’s shares fell as much as 14% in premarket trading on Nov. 14 after the company warned that its software was causing computer systems to crash. Microsoft Corp.’s shares fell 2% in premarket trading on Nov. 15 despite announcing it had resolved an outage with its cloud services that reportedly disrupted flights and banking around the world. Shares of United Airlines Holdings Inc. and Delta Air Lines Inc. fell as flights were grounded or delayed.
The Nasdaq 100 and S&P 500 contracts fell 0.2%, paring losses from the previous day. In Europe, the Stoxx 600 index fell 0.5%, marking its fifth consecutive day of declines. Shares in LSE Group, which operates the London Stock Exchange, fell 1% after reports that global technical issues were preventing news announcements. Shares in Air France-KLM, Ryanair Holdings and other airlines also fell.
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 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. Semiconductor stocks continued to tumble on concerns over new U.S. restrictions on sales to China. Taiwan Semiconductor Manufacturing Co. (TSMC) shares fell for the third straight day.
Major events this week:
Some of the key market developments:
stock
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The Stoxx Europe 600 index was down 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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Dow Jones Industrial Average futures fell 0.3%.
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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 rose 0.1%.
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The euro fell 0.2% to $1.0879.
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The Japanese yen was almost unchanged at 157.36 yen to the 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.
Cryptocurrency
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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 the 10-year Treasury note was little changed at 4.20%.
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German 10-year government bond yields were little changed at 2.43%.
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UK 10-year government bond yields rose 1 basis point to 4.08%.
merchandise
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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 assistance from Bloomberg Automation.
–With assistance from Zhu Lin, John Cheng, Winnie Hsu, and Divya Patil.
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