Stock selloff continues as Microsoft and CrowdStrike outages weigh on sentiment

A major tech outage has caused disruptions in banks, airports and major news outlets on Friday morning. Many of these outages are linked to Microsoft (NASDAQ:MSFT) products and a ‘software update gone bad’ seems to be the culprit. For now, it doesn’t seem to be a malicious hacking act but rather an internal issue. This has been linked to another major outage at cybersecurity firm Crowdstrike.

The full extent of the outage is still unknown as most of the issues are still ongoing. Both Microsoft (MSFT) and CrowdStrike Holdings (CRWD) have dropped at the start of pre-market trading in the US. The latest updates seem to suggest this is a Crowdstrike issue so the latter has taken the brunt of the fall with the stock down 15% from the close on Thursday. Microsoft dropped almost 3% at the open but has recovered some ground since then.

MSFT and CRWD 5-minute charts

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The bearish sentiment seems to have spilt over into other parts of the stock market on Friday morning. Tech stocks are taking the brunt of the bearish pressure with NVIDIA (NASDAQ:NVDA) and Apple (NASDAQ:AAPL) dropping 1.9% and 1.4% respectively. This comes at a time when major tech stocks had already started to face increased selling pressure brought on by overbought conditions. Geopolitical concerns caused NVIDIA’s stock to face a heavy selloff on Wednesday in what many analysts called an overreaction.

Major global equity indices are also feeling the pressure. The Nasdaq 100, which is mostly tech-focused, is facing its worst weekly performance since April, dropping over 3% at the start of Friday in a pull-back that originated at the end of last week. The reversal should be of no real concern just yet given the extent of the preceeding rally and how overbought the market was. For now, it seems like a technical correction, but traders may be paying close attention to how the momentum evolves next week. The US earnings season is also in full swing, with major tech stocks expected to report in the last few days of July and the beginning of August.

Meanwhile, European indices are also struggling this week. The DAX 40 is heading for its fifth day of losses and has almost wiped out the gains of the last months. The index has failed to find support at its 100-day SMA (18,268) which has been a key level since the last pullback in mid-June. The RSI has also crossed below the 50 line indicating a shift in momentum in the short-term, so we could see further pullback towards the 18,000 mark if the selling pressure intensifies.

DAX 40 daily chart

Past performance is not a reliable indicator of future results.







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