Financial Markets Affected By Rogue 140 Character Update – Associated Press Twitter Hack

A Twitter account being hacked is now an unfortunately ‘normal’ occurrence, at least in so far as that when we hear of it we are no longer as shocked or surprised as we were say a year or two ago. However, as yesterday’s hacking of the Associated Press‘s Twitter account showed, just a single 140 character update can have a significant effect almost instantaneously.

Before we discuss this story it’s worth quickly pointing out that Twitter is currently beefing up its security with the implementation of two-factor authentication in an effort to combat would-be hackers.

So yesterday the AP’s Twitter account was hacked, and the following message was posted, purportedly telling of an attack on the White House:

AP Twitter Hack

Unsurprisingly the original tweet was deleted (so we’ve had to borrow this screen-grab from the Mashable article) as soon as the breach became apparent, and the account was suspended before another AP account clarified the siutation. However, the impact of the tweet was being felt by the financial markets almost immediately. The Standard & Poors 500 Index dropped sharply by around one percent before bouncing back, with the trough representing a temporary dip in value of $136 billion.

If someone had been privy to the knowledge that such a tweet was to be sent and at what time, there could have been significant gains to be made by selling high (before the tweet) and buying low after the price dropped in reaction to the report from a ‘trustworthy’ source that the White House had been attacked and the President injured. Of course there could have been no guarantee that the markets would react in the way that they did.

The Syrian Electronic Army – a group claiming to support Syrian President Bashar al-Assad – has taken responsibility for the attack, as well as saying that it is behind other recent attacks on the Twitter feeds of Agence France Presse news agency, Sky News Arabia, al-Jazeera mobile and CBS News.