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The COVID-19 outbreak and stock market reactions: Evidence from Australia

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  • Rahman, Md Lutfur
  • Amin, Abu
  • Al Mamun, Mohammed Abdullah

Abstract

We examine how the Australian stock market responded to the uncertainties created by the COVID-19 pandemic and whether the stimulus package offered by the Government helped restore confidence in the market. This study finds a negative stock market reaction to the pandemic announcement, however, among two stimulus packages related announcements, the market reacted positively only to “JobKeeper” package. The cross-sectional results suggest that the smallest, least profitable and value portfolios suffered more during the pandemic. Finally, size and liquidity are found to be the significant drivers of abnormal returns. These results generally hold for a battery of robustness checks.

Suggested Citation

  • Rahman, Md Lutfur & Amin, Abu & Al Mamun, Mohammed Abdullah, 2021. "The COVID-19 outbreak and stock market reactions: Evidence from Australia," Finance Research Letters, Elsevier, vol. 38(C).
    • Handle: RePEc:eee:finlet:v:38:y:2021:i:c:s1544612320316469
    DOI: 10.1016/j.frl.2020.101832
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    More about this item

    Keywords

    Coronavirus; COVID-19; Australian stock market; Government stimulus package; JobKeeper package;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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