Stock markets' reaction to COVID-19: Cases or fatalities?

Badar Nadeem Ashraf

doi:10.1016/j.ribaf.2020.101249

Stock markets' reaction to COVID-19: Cases or fatalities?

Res Int Bus Finance. 2020 Dec:54:101249. doi: 10.1016/j.ribaf.2020.101249. Epub 2020 May 23.

Author

Badar Nadeem Ashraf¹

Affiliation

¹ School of Finance, Jiangxi University of Finance and Economics, Nanchang 330013, China.

Abstract

In this paper, we examine the stock markets' response to the COVID-19 pandemic. Using daily COVID-19 confirmed cases and deaths and stock market returns data from 64 countries over the period January 22, 2020 to April 17, 2020, we find that stock markets responded negatively to the growth in COVID-19 confirmed cases. That is, stock market returns declined as the number of confirmed cases increased. We further find that stock markets reacted more proactively to the growth in number of confirmed cases as compared to the growth in number of deaths. Our analysis also suggests negative market reaction was strong during early days of confirmed cases and then between 40 and 60 days after the initial confirmed cases. Overall, our results suggest that stock markets quickly respond to COVID-19 pandemic and this response varies over time depending on the stage of outbreak.

Keywords: COVID-19; Contagious disease; Coronavirus; Financial markets; Pandemic; SARS-CoV-2; Stock market.