Microsoft global outage: on the stock market, the cost of the outage does not pass

© Unsplash/Maxim Hopman

This day will remain engraved in the memories of those involved in the world of finance. The global IT outage that shook the markets this Friday, July 19, 2024 continues to cause damage, despite its resolution.

The incident, which affected Microsoft systems and impacted Crowdstrike's antivirus, caused tremors on the main stock exchanges, leaving investors in a state of palpable anxiety despite the announcement of a rapid resolution of the problem.

As soon as the European markets opened this morning, the atmosphere was one of nervousness. The Parisian CAC 40, the German DAX and the British FTSE 100 all plunged into the red, losing 0.40%, 0.75% and 0.50% respectively one hour after the start of trading, the newspaper said < em>Les Echos. This immediate market reaction demonstrates the importance of technological infrastructure in the functioning of the modern global economy.

Because the incident did not only affect the financial markets. Airline operations and part of the telecommunications sector also suffered from the outage. Enough to highlight the vulnerability of our interconnected economy.

Faced with this critical situation, Microsoft quickly reacted by announcing the implementation of “mitigation measures”. Then, around noon, Crowdstrike (Microsoft's partner behind the outage) said it had identified the source of the problem and began deploying a fix. But these reassuring announcements were not enough to completely allay investors' concerns, with European markets continuing to decline at midday.

Already tense context

Across the Atlantic, the impact of this outage was felt even before Wall Street opened. Crowdstrike's stock suffered a dizzying 17% fall in pre-stock trading. Paradoxically, this disappointment benefited the cybersecurity firm's competitors, with the shares of SentinelOne, Palo Alto Networks, Fortinet and Cloudflare being particularly sought after.

This breakdown occurs in an already tense context for the financial markets. The week began under bad auspices with the publication of disappointing figures on Chinese growth and consumption. These data caused a shock wave in the Western sectors most exposed to the Chinese economy, notably fashion and luxury. The European giants of the sector saw their market capitalization fall by more than 40 billion euros in just two days, with LVMH alone suffering a loss of more than 18 billion.

In the United States, the week was marked by major political events, including the assassination attempt against Donald Trump, which boosted his chances of victory over Joe Biden in the polls. While the prospect of a Trump return to the White House initially boosted US stocks, the trend quickly reversed following threats from the Biden administration to impose new restrictions on trade in US semiconductor technology. Nvidia, for example, suffered a massive drop of $192 billion in a single day.

The announcements on Wednesday triggered the Nasdaq's worst session since December 2022, with a drop of 2.77%, while the S&P 500 suffered its worst day since April, losing more than 1% for the first time since late April.

In this already tense context, Friday's IT outage appears to be the straw that broke the camel's back, exacerbating investors' fears about the stability and resilience of the technological infrastructures on which the global economy relies.

Despite the announced resolution of the problem, the markets therefore remain on alert. The speed with which this breakdown was able to shake the entire financial system world asks fundamental questions about the security and reliability of our digital infrastructures. Regulators and market players will need to learn lessons from this incident to strengthen the robustness of the financial system in the face of future technological challenges.

Analysts agree that this incident could have lasting repercussions on the perception of technological riskby investors. It is likely that in the coming weeks we will see a renewed interest in values ​​considered safer, to the detriment of technology stocks perceived as more volatile.

• The global IT outage affecting Microsoft and Crowdstrike caused a plunge in financial markets this Friday.
• Despite the& #8217;rapid announcement of a solution, investors remain worried, illustrating the fragility of the digital financial ecosystem.
• This incident took place #8217;set in an already tense context, marked by concerns about Chinese growth and geopolitical tensions.

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