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Understanding the Transmission of COVID-19 News to French Financial Markets

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  • Willem THORBECKE

Abstract

Ortmans and Tripier (2020) found that news of coronavirus cases in Eurozone countries increased 10-year sovereign bond spreads over German sovereign yields and decreased Eurozone stock returns between January and March 2020. This paper employs returns on 174 French assets to investigate why Covid-19 news roiled financial markets in early 2020. The crisis initially led to a crash in oil prices and an appreciation of the euro. The results indicate that increases in Covid cases especially decreased returns on assets exposed to oil price decreases and euro appreciations. The banking sector was not harmed by increases in cases, indicating that fears of a sovereign-bank nexus was not driving the response. Luxury firms benefited from increases in cases in early 2020 and afterwards weathered the crisis well.

Suggested Citation

  • Willem THORBECKE, 2021. "Understanding the Transmission of COVID-19 News to French Financial Markets," Discussion papers 21037, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:21037
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