Impact of COVID-19 on Global Stock Market uncertainty

Volume 9, Issue 3, June 2024     |     PP. 118-134      |     PDF (1334 K)    |     Pub. Date: November 11, 2024
DOI: 10.54647/economics790478    24 Downloads     665 Views  

Author(s)

Naser Ibrahim Abumustafa, School of Business, Entrepreneurship & PD Henry Ford College, Dearborn, Michigan.

Abstract
Fear and uncertainty surrounding the virus have led to mass selling, with cycles of volatility continuing into the later stages of the pandemic. The stock market witnessed ups and downs as a result of the response to successful and developing news related to the virus and related to government policies, closure policies, and developments. Uncertainty became the new norm and weaknesses appeared in various sectors, as it had a significant and varying impact on different industries. The aviation sectors have been depleted, which explains the restrictions on travel and the decline in consumer spending. Experienced technology and sponsorship companies. Healthcare and retail websites have grown as demand has shifted dramatically in response to the new realities of a socially distanced world and government interventions have played a crucial role in stabilizing markets and mitigating the economic fallout. Central banks implemented strict monetary policies in terms of lowering interest rates and injecting liquidity.

Keywords
COVID-19, Market uncertainty, pumping liquidity, interest rates

Cite this paper
Naser Ibrahim Abumustafa, Impact of COVID-19 on Global Stock Market uncertainty , SCIREA Journal of Economics. Volume 9, Issue 3, June 2024 | PP. 118-134. 10.54647/economics790478

References

[ 1 ] Abiad, A., Bluedorn, J., Guajardo, J. & Topalova, P. (2015). The Rising Resilience of Emerging Market and Developing Economies, World Development, 72, pp. 1 – 26.
[ 2 ] Akhtaruzzaman, M., Boubaker, S. & Sensoy, A. (2020). Financial Contagion during COVID – 19 Crisis, Finance Research Letters, Forthcoming. Al-Awadhi, A.M., Alsaifi, K.,
[ 3 ] Al-Awadhi, A. & Alhammadi, S. (2020). Death and Contagious Infectious Diseases: Impact of the COVID -19 Virus on Stock Market Returns, Journal of Behavioral and Experimental Finance, 27, pp. 1 – 5.
[ 4 ] Alfaro, L., Asis, G., Chari, A., & Panizza, U. (2019). Corporate Debt, Firm Size and Financial Fragility in Emerging Markets. Journal of International Economics, 118, pp. 1-19.
[ 5 ] Ali, M., Alam, N., & Rizvi, S.A.R. (2020). Coronavirus (COVID-19) – An Epidemic or Pandemic for Financial Markets. Journal of Behavioral and Experimental Finance, 27, 100341.
[ 6 ] Anderson, T.G., Bollerslev, T., Diebold, F.X. & Ebens, H. (2001). The Distribution of Realized Stock Return Volatility, Journal of Financial Economics, 61, pp. 43 – 76.
[ 7 ] Ashraf, B.N. (2020). Stock Markets’ Reaction to COVID – 19: Cases or fatalities? Research in International Business and Finance, 54, pp. 1 – 7.
[ 8 ] Baek, J., Kang, J. & Park, K.S. (2004). Corporate Governance and Firm Value: Evidence from Korean Financial Crisis, Journal of Financial Economics, 71, pp. 265 – 313.
[ 9 ] Baker, S., Nicholas, B. & Davis, S.J. (2016). Measuring Economic Policy Uncertainty, Quarterly Journal of Economics, 131(4), pp. 1593 – 1636.
[ 10 ] Baker, S., Bloom, N., Davis, S.J. & Kost, K.J. (2019). Policy News and Stock Market Volatility, NBER Working Paper No. 25720, National Bureau of Economic Research.
[ 11 ] Baker, S. R., Bloom, N., Davis, S. J., Kost, K., Sammon, M. & Viratyosi, T. (2020). The Unprecedented Stock Market Impact of COVID-19. Working Paper 26945, National Bureau of Economic Research.
[ 12 ] Baker, S.R., Bloom, N., Davis, S.J. & Terry, S.J. (2020). COVID-Induced Economic Uncertainty. NBER Working Paper No. 26983, National Bureau of Economic Research, Cambridge, MA.
[ 13 ] Bakshi, G. & Chen, Z. (1996). The Spirit of Capitalism and Stock Market Prices, American Economic Review, 86, pp. 133 – 157.
[ 14 ] Bekaert, G., Harvey, C.R. & Lundblad, C. (2005). Does Financial Liberalization Spur Growth? Journal of Financial Economics, 77, pp. 3 – 55. Black, F. (1976). Studies of Stock Price Volatility Changes. Proceedings of the 1976 Meetings of the American Statistical Association, Business and Economic Statistics Section, pp. 177 – 181.
[ 15 ] Bloom, N., Bond, S. & Reenen, J.V. (2007). Uncertainty and Investment Dynamics, Review of Economic Studies, 74, pp. 391 – 415.
[ 16 ] Bollerslev, T. (1990). Modelling the Coherence in Short-run Nominal Exchange Rate: A Multivariate Generalized ARCH Approach. Review of Economic Statistics, 72 (3), pp. 498– 505.
[ 17 ] Borjigin, S., Gao, T., Sun, Y. & An, B. (2020). For Evil News Rides Fast, while Good News Baits Later? – A Network Based Analysis in Chinese Stock Market, Physica A, 551, pp. 1 – 18.
[ 18 ] Briguglio, L., Cordina, G., Farrugia, N. & Vella, S. (2009). Economic Vulnerability and Resilience: Concepts and Measurements, Oxford Development Studies, 37(3), pp. 229 – 247.
[ 19 ] Choudhury, T., Papadimitriou, F.I. & Shabi, S. (2016). Stock Market Volatility and Business Cycle: Evidence from Linear and Nonlinear Causality Tests, Journal of Banking & Finance, 66, pp. 89 – 101.
[ 20 ] Christie, A.A. (1982). The Stochastic Behaviour of Common Stock Variances – Value, Leverage and Interest Rate Effects. Journal of Financial Economics, 10, pp. 407 – 432.
[ 21 ] Corbet, S., Hou, Y., Hu, Y., Lucey, B. & Oxley, L. (2020). Aye Corona! The Contagion Effects of Being Named Corona During the COVID – 19 Pandemic, Finance Research Letters, Forthcoming.
[ 22 ] Danielsson, J., Valenzuela, M. & Zer, I. (2018). Learning from History: Volatility and Financial Crises, The Review of Financial Studies, 31(7), pp. 2774 – 2805.
[ 23 ] Dellas, H. & Hess, M. (2005). Financial Development and Stock Returns: A Cross-Country Analysis, Journal of International Money and Finance, 24(6), pp. 891 – 912.
[ 24 ] Didier, T., Hevia, C. & Schmukler, S.L. (2012). How Resilient and Countercyclical were Emerging Economies during Global Financial Crisis? Journal of International Money and Finance, 31, pp. 2052 – 2077.
[ 25 ] Dixit, A. K. & Pindyck, R.S. (1994). Investment under Uncertainty. Princeton, NJ: Princeton University Press.
[ 26 ] Doidge, C., Karolyi, G. A., & Stulz, R. M. (2007). Why do Countries Matter so Much for Corporate Governance?', Journal of Financial Economics, 86, pp. 1–39.
[ 27 ] Duval, R. & Vogel, L. (2008). Economic Resilience to Shocks: The Role of Structural Policies, OECD Journal: Economic Studies, 44, pp. 1 – 39.
[ 28 ] Easterly, W., Islam, R. & Stiglitz, J. (2000). Explaining Growth Volatility. Working Paper. The World Bank. Engle, R. (2002). Dynamic Conditional Correlation – A Simple Class of Multivariate GARCH Models. Journal of Business & Economic Statistics, 20(3), pp. 339-350.
[ 29 ] Engle, R.F. & Ng, V.K. (1993). Measuring and Testing the Impact of News on Volatility. The Journal of Finance, 48, pp. 1749 – 1778.
[ 30 ] Engle, R.F., Ghysels, E. & Sohn, B. (2013). Stock Market Volatility and Macroeconomic Fundamentals, The Review of Economics and Statistics, 95(3), pp. 776 – 797.
[ 31 ] Estrada, M.A.R. (2020). The Impact of COVID-19 on the World Oil Prices. SSRN Electronic Journal. Fernandes, N. (2020). Economic Effects of Coronavirus Outbreak (COVID – 19) on the World Economy. SSRN Electronic Journal.
[ 32 ] Fernandes, M., Medeiros, M.C. & Scharth, M. (2014). Modelling and Predicting the CBOE Market Volatility Index. Journal of Banking and Finance, 40, pp. 1-10.
[ 33 ] Fornari, F. & Mele, A. (2013). Financial Volatility and Economic Activity, Journal of Financial Management, Markets and Institutions, 1(2), pp. 155 – 196. Gordon, M.J. (2005). Growth, Uncertainty and the Third World in the Rise and Fall of Capitalism, Journal of Asian Economics, 16, pp. 153 – 177.
[ 34 ] Gulen, H. and Ion, M. (2016). Policy Uncertainty and Corporate Investment, The Review of Financial Studies, 29(3), pp. 523 – 564.