IT crisis causes chaos in markets: CrowdStrike drops by as much as 20%

Stock markets were deep in the red after a global IT outage caused chaos in financial centres around the world.

In London, the FTSE 100 fell 43.61 points to 8,161.28 in early trading and the price remained frozen for hours, causing chaos for traders buying and selling blue-chip shares.

The index eventually closed down 0.6 percent or 49.17 points at 8,155.72.

The chaos was caused by an update that CrowdStrike, a Texas-based cybersecurity firm, sent to companies that use its software on Microsoft Windows computers to protect themselves from hackers and online intruders.

A spokesperson for the London Stock Exchange Group said: ‘We have experienced an impact on our real-time platforms, resulting in customers being unable to access and receive data. This disruption is affecting FTSE Russell’s real-time indices. Our dedicated teams are actively investigating the issue with a view to resolving it as quickly as possible.’

European investors were also nervous, with the Cac 40 in France losing 0.7 percent and the Dax in Germany falling 1 percent.

There was a sea of ​​red in the US, with the S&P 500 down 0.8 percent, the Nasdaq Composite down 0.9 percent and the Dow Jones Industrial Average losing just over 1 percent.

Microsoft and CrowdStrike were among the biggest losers, with the latter down more than 20 percent in early trading as the cybersecurity firm suffered from the fallout from the software outage. Other tech stocks also fell.

The problems were so bad that traders and bankers, including employees of JP Morgan and Marex, went home early because they could not log into their internal systems. Many saw a blue error screen appear.

Hedge funds, which rely on banks to execute and settle trades, also faced disruption. Adam Pollock, managing director at Oberon Investments, said: ‘It’s been carnage since the opening bell, with many unable to log into computer systems. Most just went home and started their weekend early.’

The London Stock Exchange also reported that its RNS service, the main place in the UK for companies to disclose regulatory news, was experiencing problems that prevented news from being published on its website.

The RNS processes more than 350,000 announcements per year and 75 percent of all price-sensitive news comes from the service.

In London, airline shares took a hit after thousands of planes were grounded, leaving holidaymakers stranded at airports. Easyjet fell 2.1 percent, or 9.7p, to 459p, and British Airways owner International Consolidated Airlines lost 2.2 percent, or 3.85p, to 170p.

British Airways warned passengers of disruption as it said it was experiencing “issues with our operational systems”. It is a particularly sensitive time for airlines, at what will be their busiest time of the year. In Germany, Lufthansa fell 1.8 percent and Air France fell 2 percent in Paris.

Insurers such as Beazley and Hiscox saw some of the biggest falls on signs that traders are pricing in big payouts under business interruption cover. Beazley fell 3.3 percent and Hiscox fell 1.8 percent.

Grzegorz Drozdz, an analyst at the Conotoxia exchange, said: “It may take months before we know who the responsible party is and whether compensation can be claimed.

‘Even if a guilty party is identified, they may not be able to cover such large liabilities. It may be that a significant portion of the costs are covered by insurers or reinsurance companies.’

Investors instead sought safe havens, buying well-known brands such as Rolls-Royce and Sainsbury’s, which rose 2.7 percent and 0.7 percent respectively.

Dan Coatsworth, investment analyst at AJ Bell, said: ‘The world grinding to a halt due to a global IT crisis shows the downside of technology. It’s clear that life doesn’t always get easier when you’re reliant on computers.’