Oil and stock markets volatility during pandemic times: a review of G7 countries

This research aims to show the positive and negative indirect effects of COVID-19 on the environment, particularly in the most affected countries such as China, USA, Italy, and Spain. Our research shows that there is a significant association between contingency measures and improvement in air quality, clean beaches and environmental noise reduction. On the other hand, there are also negative secondary aspects such as the reduction in recycling and the increase in waste, further endangering the contamination of physical spaces (water and land), in addition to air. Global economic activity is expected to return in the coming months in most countries (even if slowly), so decreasing GHG concentrations during a short period is not a sustainable way to clean up our environment.

In this paper, we analyze the connectedness between the recent spread of COVID-19, oil price volatility shock, the stock market, geopolitical risk and economic policy uncertainty in the US within a time-frequency framework. The coherence wavelet method and the wavelet-based Granger causality tests applied to US recent daily data unveil the unprecedented impact of COVID-19 and oil price shocks on the geopolitical risk levels, economic policy uncertainty and stock market volatility over the low frequency bands. The effect of the COVID-19 on the geopolitical risk substantially higher than on the US economic uncertainty. The COVID-19 risk is perceived differently over the short and the long-run and may be firstly viewed as an economic crisis. Our study offers several urgent prominent implications and endorsements for policymakers and asset managers.

Abstract No previous infectious disease outbreak, including the Spanish Flu, has affected the stock market as forcefully as the COVID-19 pandemic. In fact, previous pandemics left only mild traces on the U.S. stock market. We use text-based methods to develop these points with respect to large daily stock market moves back to 1900 and with respect to overall stock market volatility back to 1985. We also evaluate potential explanations for the unprecedented stock market reaction to the COVID-19 pandemic. The evidence we amass suggests that government restrictions on commercial activity and voluntary social distancing, operating with powerful effects in a service-oriented economy, are the main reasons the U.S. stock market reacted so much more forcefully to COVID-19 than to previous pandemics in 1918–1919, 1957–1958, and 1968.