Financial markets under the global pandemic of COVID-19

Highlights

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  The COVID-19 pandemic has significant impacts on global financial markets.

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  Substantial increases of volatility are found in global markets due to the outbreak.

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  Global stock markets linkages display clear different patterns before and after the pandemic announcement.

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  Policy responses may create further uncertainties in the global financial markets.

Abstract

The rapid spread of coronavirus (COVID-19) has dramatically impacted financial markets all over the world. It has created an unprecedented level of risk, causing investors to suffer significant loses in a very short period of time. This paper aims to map the general patterns of country-specific risks and systemic risks in the global financial markets. It also analyses the potential consequence of policy interventions, such as the US’ decision to implement a zero-percent interest rate and unlimited quantitative easing (QE), and how these policies may introduce further uncertainties into global financial markets.