CrowdStrike-induced Microsoft outage stirs temporary market volatility

Vijay Valecha, The National, July 19, 2024

The Microsoft Windows outage on Friday, which affected many industries and millions of computer users globally, is expected to temporarily heighten US market volatility, especially tech-heavy indices such as the Nasdaq.

The outage was linked to a faulty software update from CrowdStrike, one of the world's largest cyber security companies, which hit millions of Microsoft Windows users, leading to widespread disruption across airlines, banks and other industries.

CrowdStrike shares dropped by more than 20 per cent in pre-market trading on Friday following the disruption. Microsoft dipped more than 2.5 per cent in pre-market trading.

The two companies' shares have been fluctuating since the market opened. Texas-based CrowdStrike was down more than 9 per cent, while Microsoft was trailing 0.4 per cent at 8.05pm UAE time.

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Currency pairs are denoted by combining the symbols of two different currencies, where the first currency listed is the base currency and the second is the quote currency. For example, in the EUR/USD pair, EUR is the base currency, and USD is the quote currency. The exchange rate indicates how much of the quote currency is needed to purchase one unit of the base currency. So, using the same example, this would translate into how many euros is needed to purchase 1 US dollar.

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Nasdaq Composite and S&P 500 Index were trading 0.33 per cent and 0.32 per cent down, respectively, at 8.05pm UAE time on Friday. While another major US stock market indice Dow Jones Industrial Average was down 0.75 per cent.

European stock markets also extended their losses on Friday following the outage. The Euro Stoxx 50 index dropped 0.97 per cent and the Euro Stoxx 600 index was down 0.85 per cent at 8.05pm UAE time.

Advice for investors?

Given the scale of the outage, short-term market instability is expected to remain high, and investors are likely to see significant price swings as companies work to restore normal operations, said Adam Garcia at financial services firm Stock Dork.

How long will it take for markets to recover?

The tech outage seemed to have sparked a “sentiment-driven reaction” rather than indicating a long-term impact, suggesting that the initial drop is likely to be fully recovered during US trading hours, according to Vijay Valecha, chief investment officer at Dubai-based Century Financial.

“This dip is likely to be recovered within the day’s trading session as many investors are viewing it as a buying opportunity,” Mr Valecha told The National.

Source

The National