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Are fear and hope of the COVID-19 pandemic responsible for the V-shaped behaviour of global financial markets? A text-mining approach

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  • Vu Minh Ngo
  • Huan Huu Nguyen

Abstract

This study found the recent global V-shaped behaviour in major stock and cryptocurrency markets to be attributed to the dramatic variance in public fears and hope regarding the COVID-19 pandemic. Using the Term Frequency-Inverse Document Frequency text-mining technique and a large dataset of tweets, we determined that the public sentiment on joint discourses of COVID-19 and financial topics was a strong driver of recent stock and cryptocurrency markets behaviour. Furthermore, error correction model estimations revealed that the reversal of public sentiment from fear to hope after the initial shock significantly contributed to financial markets’ recovery phase of the V-shaped behaviour, partially explaining their sudden turnaround beginning mid-March 2020.

Suggested Citation

  • Vu Minh Ngo & Huan Huu Nguyen, 2022. "Are fear and hope of the COVID-19 pandemic responsible for the V-shaped behaviour of global financial markets? A text-mining approach," Applied Economics Letters, Taylor & Francis Journals, vol. 29(11), pages 1005-1015, June.
    • Handle: RePEc:taf:apeclt:v:29:y:2022:i:11:p:1005-1015
    DOI: 10.1080/13504851.2021.1904105
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    Cited by:

    1. Florin-Teodor Boldeanu & Adriana Veronica Litră & José Antonio Clemente-Almendros & Ileana Tache, 2022. "The link Between Stock Exchange Sectors and Indices: Implications During the COVID-19 Pandemic," SAGE Open, , vol. 12(4), pages 21582440221, December.

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