In an unprecedented event, a major software bug in CrowdStrike's systems and subsequent issues with Microsoft operating systems led to the largest IT outage in history, causing widespread disruptions across the globe. This massive failure impacted critical sectors including airlines, healthcare, and financial services, grounding flights and crippling logistics operations. The outage comes amid an
In an unprecedented event, a major software bug in CrowdStrike's systems and subsequent issues with Microsoft operating systems led to the largest IT outage in history, causing widespread disruptions across the globe. This massive failure impacted critical sectors including airlines, healthcare, and financial services, grounding flights and crippling logistics operations. The outage comes amid an already strained global supply chain, exacerbating existing challenges and highlighting vulnerabilities in the digital infrastructure that supports essential services worldwide. Concurrently, the Dow Jones Industrial Average plummeted by more than 370 points while the S&P 500 experienced its steepest weekly decline since April, highlighting a significant shift in investor sentiment. This downturn was fuelled by a broad sell-off in megacap technology stocks, as investors moved towards smaller, more cyclically oriented names, lifted by rising optimism around potential interest rate cuts from the Federal Reserve.
Key Takeaways:
Dow Jones Falls Over 370 Points: The Dow Jones Industrial Average tumbled 377.49 points, or 0.93%, to close at 40,287.53, marking a significant shift in investor sentiment as megacap technology stocks sold off.
S&P 500 and Nasdaq Post Worst Week Since April: The S&P 500 dropped 0.71% to 5,505.00 and slipped 1.97% for the week, while the Nasdaq Composite slid 0.81% to 17,726.94, with a weekly decline of 3.65%. Both indices experienced their biggest weekly losses since April.
Tech Sector Leads Declines: The information technology sector led the S&P 500 lower with a 5.1% drop. Megacap tech stocks, including Amazon, Intel, Microsoft, Apple, and Salesforce, were among the biggest losers, with Amazon on pace for a 6% drop and Microsoft slipping around 4%.
Small Caps Gain Amid Market Rotation: As investors rotated out of large tech stocks, smaller, more cyclically oriented names gained traction. The Dow advanced 0.72% for the week, while the small-cap-focused Russell 2000 climbed 1.68%, reflecting optimism around potential interest rate cuts from the Federal Reserve.
European Markets Close Lower Amid IT Failures: The pan-European Stoxx 600 index fell 0.77%, with the travel sector dropping 2.07%. Banks also recorded losses, with BNP Paribas, Societe Generale, and Credit Agricole falling by 1%, 0.9%, and 0.7% respectively. In Germany, Deutsche Bank AG shares fell by 1.5%, while Commerzbank shares rose by 0.4%. The FTSE 100 fell 0.6% on Friday to 8,155.72, driven by declines in mining stocks and retail sales. Precious metal miners fell 0.8%, with Fresnillo down 1.4%, and industrial metal miners decreased by 1.7% due to lower copper prices. Meanwhile, the CAC 40 Index dropped 68 points or 0.89%.
Asia-Pacific Markets Track Wall Street Declines: Asia-Pacific markets fell on Friday, mirroring Wall Street's tech sell-off. Japan's Nikkei 225 ended 0.16% lower at 40,063.79, and the Topix retreated 0.27% to 2,860.83. Japan's headline inflation held steady at 2.8% for June, with core inflation slightly rising to 2.6%. Hong Kong’s Hang Seng index dropped 2.02%, while mainland China’s CSI 300 inched up 0.51%. South Korea’s Kospi fell 1.02% to 2,795.46, marking its steepest weekly decline since April 15. The small-cap Kosdaq climbed 0.76% to 828.72. In Taiwan, the Taiwan Weighted Index shed 2.26% to 22,869.26, while Australia's S&P/ASX 200 fell 0.81% to 7,971.6.
Oil Prices Drop Over $2 Amid Gaza Ceasefire Hopes: Brent crude prices fell $2.48, or 2.91%, to $82.63 a barrel, while US West Texas Intermediate crude futures dropped $2.69, or 3.25%, to $80.13 a barrel, driven by the latest developments in the Middle East.
FX Today:
Gold Prices Drop To The Biggest One-day Loss Since June: Gold (XAU/USD) prices stumbled beneath the $2,400 mark, closing at $2,399 after reaching a high of $2,447 earlier in the week. This drop signifies a pullback as traders took profits following an 8% rally. The Relative Strength Index (RSI) remains bullish, but near-term momentum favours sellers. Gold prices were down over 2% on Friday, marking their biggest one-day loss since June 7. Key support levels include the July 5 high at $2,392, the 50-day SMA at $2,357, and the 100-day SMA at $2,312. If prices reclaim $2,450, they may challenge the all-time high of $2,483.
Silver losses to three straight days: Silver prices plummet below $29.50, losing 2.05% on Friday. The metal saw a weekly decline of over 5% due to profit-taking. Immediate support is at the $29.00 psychological level, followed by $28.57 and the 100-DMA at $28.23. For a bullish continuation, XAG/USD must rise above $29.50 to test the $30.00 mark, with further resistance at the 50-DMA at $30.17 and the $31.00 level.
EUR/USD Maintains Bullish Trend Amid Data Miss: The EUR/USD pair stands at the upper end of its range, with the risk skewed to the upside. The pair is trading above its 20 and 100 SMAs, with the 200 SMA providing resistance around 1.1080. The Momentum indicator is above the 100 line, and the RSI is flat around 55. EUR/USD needs to hold above 1.0800 to maintain its bullish trend, with resistance at 1.0950 and 1.1000. A break below 1.0800 exposes the 1.0740 and 1.0660 levels, with a major bearish target at 1.0600.
GBP/USD Falls Toward 1.2900 Amid Retail Sales Data: GBP/USD continues to decline, closing at 1.2910 following disappointing UK retail sales data and a recovering USD. Immediate support lies at 1.2900, followed by 1.2875 and 1.2820-1.2830. Resistance is at 1.2930, 1.2960, and 1.3000.
USD/JPY Consolidates Around 157.50: USD/JPY edged up slightly to 157.44, failing to break above 158.00. If the pair drops below 157.00, it may test support at 156.00 and the July 18 low of 155.37. A move below 155.00 exposes the May 16 swing low of 153.61. Conversely, surpassing 157.50 could lead to a retest of the July 16 peak at 158.85.
NZD/USD Drops to Key Support: NZD/USD declined by 0.65% to 0.6010, marking its worst week since the start of the year with a weekly loss of 1.80%. Resistance is at 0.6070 and 0.6100, while strong support is at the 0.6000 psychological level. Further decline could solidify the bearish trend, with targets at the 0.6450-0.6470 range.
Market Movers:
CrowdStrike Falls After IT Outage: Shares of CrowdStrike plummeted 11.1% following a major IT outage caused by a software bug in its systems, which disrupted businesses and critical services globally. This incident underscored the significant vulnerabilities within the cybersecurity sector and led to substantial market reactions.
Microsoft Slips Amid IT Disruptions: Microsoft shares dropped nearly 1% after its operating systems were affected by the CrowdStrike bug, resulting in widespread disruptions. Despite the significant impact on global operations, trading on the New York Stock Exchange and Nasdaq remained unaffected.
Plug Power Plummets: Green energy company Plug Power saw its shares tumble nearly 14%, marking its fourth consecutive year of losses. The decline followed the company's announcement of a $200 million stock sale, with shares currently trading around $2.50 each.
Comerica Drops on Q2 Financial Results: Comerica shares fell about 10.5% after reporting second-quarter financial results showing a decrease in net interest income compared to the prior-year quarter. Despite net interest income of $533 million, exceeding the $530.5 million expected, high rates continue to pressure the bank's deposits.
Hawaiian Electric Surges on Settlement News: Hawaiian Electric's stock surged more than 37% after reports emerged of a tentative $4 billion settlement to resolve lawsuits over the Maui wildfires. The deal, though not finalized, significantly boosted investor sentiment.
Intuitive Surgical Jumps on Strong Q2 Results: Intuitive Surgical shares rose over 9% following the release of its second-quarter results, which surpassed Wall Street's expectations. The company reported adjusted earnings of $1.78 per share on $2.01 billion in revenue, exceeding analysts' estimates of $1.54 per share on $1.97 billion in revenue.
American Express Falls on Mixed Results: American Express saw a decline of nearly 3% after reporting mixed second-quarter results. The company posted revenue of $16.33 billion, falling short of the expected $16.59 billion, while adjusted earnings per share were $3.49, beating the expected $3.24.
Travelers Declines After Mixed Q2 Earnings: Insurance company Travelers' stock fell almost 8% following mixed second-quarter earnings. The company reported adjusted earnings of $2.51 per share, beating the $1.98 consensus, but revenue came in lower at $11.12 billion, missing the $11.34 billion expected. Peer insurer W.R. Berkley also saw a decline of over 8%.
Arm Holdings Gains on Morgan Stanley Upgrade: Arm Holdings shares increased by more than 3% after Morgan Stanley upgraded the stock to overweight from equal weight. The upgrade was based on the fundamental importance of Arm's products in the emerging edge artificial intelligence market.
The impact of the unprecedented IT outage caused by CrowdStrike and subsequent disruptions at Microsoft has sent shockwaves through the global market, highlighting the vulnerabilities in our increasingly digital world. The sharp declines in megacap technology stocks have led to significant losses for major indices, with the Dow plummeting over 370 points and the S&P 500 experiencing its worst week since April. Investors are recalibrating their strategies, shifting focus to smaller, more cyclically oriented names amidst growing optimism about potential interest rate cuts from the Federal Reserve. The market's response to these disruptions underscores the critical importance of robust cybersecurity measures and the ongoing challenges within the global supply chain.
