Openness, economic uncertainty, government responses, and international financial market performance during the coronavirus pandemic

Abstract This study explores the impact of COVID-19 on financial markets controlled by macroeconomic and administrative factors. As natural experimentation, we employ panel data analysis to test 50 stock market indices from January 01 to August 20, 2020. The findings suggest daily growth of COVID-19 confirmed cases have considerable adverse effects on stock returns and positive impacts on investment risks across markets. The government prompt interventions offset adverse impacts of the pandemic. Market reactions to the outbreak and authority responses information are more momentous in more developed economies due to their better information efficiency. The country-specific features of globalisation, uncertainty, healthcare system readiness, and economic development levels appear to have substantial impacts on equity market reactions. Financial markets in countries with higher levels of globalisation, economic policy and financial uncertainty experience more chaos during the pandemic. While those hostile effects are less significant in countries with robust healthcare systems.