Nicoleta Bărbuță-Mișu1, Teodor Hada2, Iulia Cristina Iuga3, Dorin Wainberg4
1Department of Business Administration, ”Dunarea de Jos” University of Galati, Galati, Romania
2Department of Finance, “Bogdan Voda” University, Cluj-Napoca, Romania
3,4 Department of Finance-Accounting, “1 Decembrie 1918” University of Alba Iulia, Alba Iulia, Romania
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.
JEL classification: G01, G09, G14 and G41.
Cite as:
Bărbuță-Mișu, N., Hada, T., Iuga Ic.C., and Wainberg, D. 2024. Covid-19 Shock: The Short-Term Impact on the European and American Financial Markets. Oradea Journal of Business and Economics, 9(2), pp.9-27. http://doi.org/10.47535/1991ojbe192.