The COVID-19 Outbreak and Stock Market Reactions: Evidence from Australia
16 Pages Posted: 24 Feb 2021
Date Written: January 26, 2021
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: Suggested Citation