The COVID-19 Outbreak and Stock Market Reactions: Evidence from Australia

16 Pages Posted: 24 Feb 2021

See all articles by Md Lutfur Rahman

Md Lutfur Rahman

University of Newcastle (Australia) - Newcastle Business School

Abu S. Amin

Mohammed Abdullah Al Mamun

University of Newcastle - The University of Newcastle

Date Written: January 26, 2021

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.

Keywords: Coronavirus; COVID-19; Australia Stock Market; Government Stimulus Package; JobKeeper package

JEL Classification: G15, G18

Suggested Citation

Rahman, Md Lutfur and Amin, Abu S. and Al Mamun, Mohammed Abdullah, The COVID-19 Outbreak and Stock Market Reactions: Evidence from Australia (January 26, 2021). Finance Research Letters, 2021, Available at SSRN: https://ssrn.com/abstract=3773839 or http://dx.doi.org/10.2139/ssrn.3773839

Md Lutfur Rahman

University of Newcastle (Australia) - Newcastle Business School ( email )

City Campus East – 231
Newcastle-Upon-Tyne NE1 8ST, NE1 8ST
Australia

Mohammed Abdullah Al Mamun

University of Newcastle - The University of Newcastle ( email )

Australia

No contact information is available for Abu S. Amin

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