(Bloomberg) — US equity futures steadied Friday after earlier losses driven by computer systems outages that disrupted travel, trading and banking services worldwide.
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Contracts on the Nasdaq 100 and S&P 500 index inched up about 0.1%. Cybersecurity firm Crowdstrike Inc. was down about 10% in premarket trading, having earlier plunged as much as 21% after warning its software was causing computer systems to crash. Its chief executive later said the issue had been identified and “a fix was being deployed.” Microsoft Corp. shares also pared losses, as it said it had resolved an earlier cloud-services outage.
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.
Tech outages do not usually inflict prolonged damage on markets, 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.
Europe’s Stoxx 600 index slipped 0.4%, on track for a fifth day of losses. LSE Group Plc, which operates the London stock exchange, recouped some of the share-price losses triggered after it said technical issues were preventing news from being published. Air France-KLM, Ryanair Holdings Plc and other airlines traded lower as flights were either grounded or delayed.
The recent moves into smaller, lower-valuation sectors were precipitated by signs the Federal Reserve will cut interest rates in September — a view encouraged 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.
US small-cap funds recorded $9.9 billion of weekly inflows, the second largest ever, Bank of America Corp. strategists said Friday, citing EPFR Global data.
“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.”
Meanwhile, company earnings continued to trickle in. American Express Inc. slipped in premarket trading as it boosted its earnings-per-share forecast but posted lower-than-expected revenue and card fees in the second quarter. Netflix Inc. fell after guidance from the streaming-video giant missed expectations.
Key events this week:
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.4% as of 1:06 p.m. London time
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S&P 500 futures rose 0.1%
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Nasdaq 100 futures rose 0.2%
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Futures on the Dow Jones Industrial Average fell 0.2%
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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 was little changed
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The euro was little changed at $1.0890
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The Japanese yen fell 0.1% to 157.54 per dollar
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The offshore yuan was little changed at 7.2815 per dollar
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The British pound fell 0.2% to $1.2923
Cryptocurrencies
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Bitcoin rose 0.6% to $64,225.89
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Ether fell 0.2% to $3,408.28
Bonds
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The yield on 10-year Treasuries advanced one basis point to 4.22%
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Germany’s 10-year yield advanced two basis points to 2.45%
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Britain’s 10-year yield advanced four basis points to 4.10%
Commodities
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Brent crude fell 0.1% to $85.01 a barrel
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Spot gold fell 1.5% to $2,407.38 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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