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First to React Is Last to Forgive: Evidence from the Stock Market Impact of COVID 19

Author

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  • M. Hassan, Sherif

    (M&S Research Hub institute)

  • Riveros, John

    (M&S Research Hub institute)

Abstract

COVID 19 has had parallel and uneven economic shocks across countries since its outbreak in December 2019. Stock markets as usual were the first to react, with drop rates as much as the Global Financial crises of 2008. This study uses daily data to model the dynamic impact of COVID 19 pandemic on returns of selected stock market indices and globally-traded commodities. The overall panel least squares VAR estimation results indicate a negative short termed impact of 2.3% on the performances of the stock markets when the spread rate of corona-virus increases by 1% across countries ceteris paribus. While The COVID 19 contamination rate is not statistically significant to explain the changes in the exchange rate and gold prices in the countries of analysis, yet the virus spread rate is found to be significant in steering prices of platinum, silver, WTI, and Brent crude oil.

Suggested Citation

  • M. Hassan, Sherif & Riveros, John, 2020. "First to React Is Last to Forgive: Evidence from the Stock Market Impact of COVID 19," MSR Working Papers 2-2020, M&S Research Hub institute.
    • Handle: RePEc:ris:msrwps:2020_002
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    2. Beata Bieszk-Stolorz & Iwona Markowicz, 2022. "Changes in Share Prices of Macrosector Companies on the Warsaw Stock Exchange as a Reaction to the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    3. Md. Bokhtiar Hasan & Masnun Mahi & Tapan Sarker & Md. Ruhul Amin, 2021. "Spillovers of the COVID-19 Pandemic: Impact on Global Economic Activity, the Stock Market, and the Energy Sector," JRFM, MDPI, vol. 14(5), pages 1-18, May.
    4. Inna Bielova & Jaroslav Halík & Lyudmila Ryabushka, 2021. "The Causal Nexus of Consumer and Business Confidence Indexes in Early Pandemic Period: Evidence from OECD Countries," JRFM, MDPI, vol. 14(7), pages 1-14, July.
    5. Mohammad Reza Farzanegan & Mehdi Feizi & Hassan F. Gholipour, 2021. "Globalization and the Outbreak of COVID-19: An Empirical Analysis," JRFM, MDPI, vol. 14(3), pages 1-10, March.
    6. Krzysztof Dmytrów & Joanna Landmesser & Beata Bieszk-Stolorz, 2021. "The Connections between COVID-19 and the Energy Commodities Prices: Evidence through the Dynamic Time Warping Method," Energies, MDPI, vol. 14(13), pages 1-23, July.
    7. Tihana Škrinjarić, 2021. "Profiting on the Stock Market in Pandemic Times: Study of COVID-19 Effects on CESEE Stock Markets," Mathematics, MDPI, vol. 9(17), pages 1-20, August.
    8. Gharib, Cheima & Mefteh-Wali, Salma & Serret, Vanessa & Ben Jabeur, Sami, 2021. "Impact of COVID-19 pandemic on crude oil prices: Evidence from Econophysics approach," Resources Policy, Elsevier, vol. 74(C).
    9. Beata Bieszk-Stolorz & Iwona Markowicz, 2022. "The Impact of the COVID-19 Pandemic on the Situation of the Unemployed in Poland. A Study Using Survival Analysis Methods," Sustainability, MDPI, vol. 14(19), pages 1-19, October.
    10. Yuandong, Su & Khaskheli, Asadullah & Raza, Syed Ali & Yousufi, Sara Qamar, 2022. "How COVID-19 influences prices of oil and precious metals: Comparison between data extracted from online searching trends and actual events," Resources Policy, Elsevier, vol. 78(C).
    11. Zheng Chang & Alex Wei Fung NG & Siying Peng & Dandi Shi, 2024. "Stock price reactions to reopening announcements after China abolished its zero-COVID policy," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-9, December.

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    More about this item

    Keywords

    Panel VAR; Stock Market Indices; COVID 19;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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