Stock prices in London were lower at midday Friday, as investors grappled with a large IT outage on a global scale that affected a plethora of businesses and trade.
Companies around the world reported technical issues, with planes grounded, trains disrupted, and television and radio broadcasters taken offline, while Microsoft Corp said it was taking mitigating actions after service issues.
As AJ Bell’s Dan Coatsworth reflected: ‘The severity of the problem boils down to how long it lasts. A few hours’ disruption is unhelpful but not a catastrophe. Prolonged disruption is another matter, potentially causing damage to companies and economies.’
‘Futures prices imply a small pullback when Wall Street opens later today, but so far investors have not shown any panic. Whether that remains the case as the day goes on is another matter.’
The FTSE 100 index was down 33.46 points, or 0.4%, at 8,171.60. The FTSE 250 was down 129.58 points, or 0.6%, at 21,104.85, and the AIM All-Share was 3.48 points, or 0.4%, at 784.19.
The Cboe UK 100 was down 0.5% at 815.37, the Cboe UK 250 was down 0.6% at 18,412.15, and the Cboe Small Companies was fractionally lower at 17,348.44.
Stocks remained downbeat at midday, as poor retail sales continued to drag on sentiment, even as opinion polls put in a good word for UK Prime Minister Keir Starmer.
‘The public had plenty of distractions in June, namely the impending general election, miserable weather, the euro football championship and high interest rates continuing to put pressure on household finances. It’s no wonder that retail sales were poor in the month,’ said AJ Bell’s Coatsworth.
According to the Office for National Statistics, UK retail sales volumes fell by 1.2% in June from a month before, swinging from a rise in May, thanks to gloomy weather. This compared to FXStreet-cited market consensus of a 0.4% monthly decline in June.
On an annual basis, sales fell by 0.2% in June.
Reflecting on the results, Coatsworth added: ‘The retail industry has had one of the most challenging years in living memory thanks to unfavourable weather conditions and the ongoing cost-of-living crisis. The pace of inflation might be easing but the cost of goods is still going up.’
Elsewhere in the world of government, Keir Starmer ended his first week as prime minister as popular as Boris Johnson was at the height of the vaccine rollout, a poll has found.
Some 36% of the public told pollster Ipsos they thought Starmer was doing a good job as prime minister, the highest rating for a premier since February 2021 when 37% said the same about Johnson.
Just 14% of the public think the new prime minister is doing a bad job, well below the 41% that thought negatively of Johnson in February 2021 – and the 57% that thought badly of Rishi Sunak just before he called the election.
In European equities on Friday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was down 0.8%.
According to the Federal Statistical Office, producer prices declines as expected annually in Germany in June.
Producer prices fell 1.6% year-on-year in Germany in June, decelerated from a contraction of 2.2% in May. The decline in June was in line with the FXStreet-cited consensus. Monthly, producer prices edged up 0.2% in June, compared to no change the statistical office had reported for May.
The pound was quoted at $1.2906 at midday on Friday, lower than $1.2972 at the London equities close on Thursday. The euro traded at $1.0881, lower than $1.0908. Against the yen, the dollar was quoted at JP¥157.52, up versus JP¥156.70.
In the FTSE 100, Segro lost 0.5%.
The firm saw its shares fall, after announcing that its Italian joint venture, Segro European Logistics, disposed of logistics warehouse assets. The London-based property investment firm sold four warehouses, two located in Milan and two in Rome, covering 338,745 square metres for a €327 million cash consideration.
By contrast, Bridgepoint gained 9.2%.
The London-based private equity investor reported first-half results ahead of expectations, as it prepares to complete its £835 million acquisition of Energy Capital Partners.
Assets under management totalled €42.7 billion on June 30, up 8.1% from €39.5 billion a year before. Pro forma AuM including ECP came to €67.3 billion. Pretax profit excluding ECP was £48.8 million, down 8.1% from £53.1 million a year before. Pro forma pretax profit including ECP was £99.9 million.
Underlying pretax profit excluding ECP, however, was up 57% to £78.7 million from 50.0 million, as underlying management fees excluding ECP rose by 25% to £156.0 million from £124.6 million a year before.
Virgin Money UK shares gained just 0.1%, after the UK Competition & Markets Authority said it will not proceed with an investigation into Nationwide Building Society’s planned acquisition of the firm.
The decision gives a green light to the takeover of Leeds-based lender Virgin Money UK, which last month reported an 18% profit jump to £279 million in the six months to March 31, from £236 million a year prior.
In early March, Nationwide reached a preliminary agreement with Virgin Money to acquire the company for 220 pence per share, comprising 218p and a 2p dividend, and equating to a total valuation of £2.9 billion. This represented a 38% premium to the Virgin Money’s closing price of 159.05p the day before the offer.
Stocks in New York were seen lower. The Dow Jones Industrial Average and the Nasdaq Composite were called down 0.2%, and the S&P 500 index down 0.1%.
Equities across the pond were still seen red at midday, as the presidential campaign continues to gather heat.
According to the Washington Post, former president Barack Obama has told allies that US President Joe Biden needs to reconsider whether he stands for re-election in November.
‘There are rumours that [Biden] could throw in the towel as early as this weekend. If that happens, we could see the Trump trade gain further momentum. That would benefit to Bitcoin, equities – especially the small and domestically focused ones - and cause a yield curve steepening with the long-end of the US treasuries feeling the heat of exploding debt,’ said Swissquote Bank’s Ipek Ozkardeskaya.
She added: ‘Some ask how long this Trump trade will last. The answer is a few weeks, maybe a few months...But in [time], factors like the Federal Reserve and other central banks policy decisions, the international trade tensions, the global growth prospects, China, climate and idiosyncratic factors like AI should say the last word on the overall direction of the global stock markets.’
Also dragging down New York equities was a 15% tumble in pre-market trading for CrowdStrike, amid suggestions it was involved in the massive IT outage on Friday morning.
According to Oleg Gorokhovsky, founder of the Ukrainian online bank Monobank, the outage resulted from ‘an interaction between the CrowdStrike antivirus’ software and the Windows operating system of Redmond, Washington-based tech firm Microsoft Corp, reported AFP.
Brent oil was quoted at $85.09 a barrel at midday in London on Friday, higher than $84.99 late Thursday.
Gold was quoted at $2,415.60 an ounce, lower than $2,465.41.
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