Volatility and Response of Financial Markets to COVID 19: Panorama of Theoretical and Applied Studies

Abstract

 This research aims to take a comprehensive and close look at the reactions of global stock markets to the outbreak Covid-19 during the first quarter of 2020, by conducting a reference survey of studies that dealt with the event. The results showed that the global financial market indicators responded quickly to the epidemic shock, as the decline in prices and returns was dramatic, severe, synchronized and infectious, despite the variation in reactions and patterns of volatility from one market to another. The returns showed extreme volatility patterns and significant anomalies from normal behavior with instability in time-series of price changes, which hints to the growing degree of risk and uncertainty in global financial markets. The same results also indicated that the impact of the Covid-19 outbreak on the markets, in association with intermediate channels and factors, was more destructive than other previous crises.