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Covid-19 Shock: The Short-Term Impact On The European And American Financial Markets

Author

Listed:
  • Nicoleta Barbuta-Misu

    (Department of Business Administration, †Dunarea de Jos†University of Galati, Galati, Romania)

  • Teodor Hada

    (Department of Finance, “Bogdan Voda†University, Cluj-Napoca, Romania)

  • Iulia Cristina Iuga

    (Department of Finance-Accounting, “1 Decembrie 1918†University of Alba Iulia, Alba Iulia, Romania)

  • Dorin Wainberg

    (Department of Finance-Accounting, “1 Decembrie 1918†University of Alba Iulia, Alba Iulia, Romania)

Abstract

The new coronavirus has very seriously shaken the behavior of global financial markets. Globally, the COVID-19 shock is considered severe, even compared to the Great Financial Crisis that took place in 2007-2008. Considering the persistence of the virus, this study is designed to investigate the short-term impact of COVID-19 upon financial markets of Europe and the United States (US) in the entire year of 2020. In the research we used daily data from the period 1st January – 31st December 2020 and linear regression. The stock markets indices selected in the sample were: European stock indices DAX30, FTSE100 and CAC40 and the American stock indices DJI and S&P500. The study’s results showed that there is a significant relationship between the number of new daily cases of COVID-19 and the considered stock market indices. But there is a much stronger correlation between oil prices and stock indices than between the number of COVID-19 new cases and stock indices. We conclude that the market has been intensely agitated at a terrible level. The American, London, French and German stock markets reacted negatively to the increase in confirmed cases of COVID-19 and to the price of oil. So, the market reaction with respect to the number of COVID-19 new daily cases is significant.

Suggested Citation

  • Nicoleta Barbuta-Misu & Teodor Hada & Iulia Cristina Iuga & Dorin Wainberg, 2024. "Covid-19 Shock: The Short-Term Impact On The European And American Financial Markets," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 9(2), pages 9-27, September.
    • Handle: RePEc:ora:jrojbe:v:9:y:2024:i:2:p:9-27
    DOI: http://doi.org/10.47535/1991ojbe192
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    More about this item

    Keywords

    COVID-19 pandemic; European stock indices; US stock indices; oil prices; financial markets behaviour.;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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