Global Evidence on Early Effects of COVID-19 on Stock Markets

We use event study approach to assess the effects of the early stages of COVID-19 on global markets. A large sample of stock markets (66) covering all key global markets and regions is included. The findings indicate that the Wuhan lockdown induces negative spillover effects on markets in Europe, North America and other global markets that have yet to introduce domestic restrictions and have minimal infections at the time. Increasing cases outside China particularly in Europe and the introduction of containment measures result in severe market decline. Our findings highlight the need for quick, globally coordinated response to contagious diseases.