COVID-19 SHOCK: THE SHORT-TERM IMPACT ON THE EUROPEAN AND AMERICAN FINANCIAL MARKETS

Nicoleta Barbuta-Misu (), Teodor Hada (), Iulia Cristina Iuga () and Dorin Wainberg ()
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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

Oradea Journal of Business and Economics, 2024, vol. 9, issue 2, 9-27

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.

Keywords: COVID-19 pandemic; European stock indices; US stock indices; oil prices; financial markets behaviour. (search for similar items in EconPapers)
JEL-codes: G01 G14 G41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ora:jrojbe:v:9:y:2024:i:2:p:9-27

DOI: 10.47535/1991ojbe192

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