Abstract
This study explores the contrasting impacts of the COVID-19 pandemic on various industries in Australia. Considering all daily announced information, we analyzed the diverse impacts of COVID-19 on the sectoral stock returns from 26 January to 20 July 2020. Sixteen out of twenty examined stock indices negatively react to the daily rise in COVID-19 confirmed cases. Several actions from the Australian government to control the pandemic are relatively ineffective in boosting the overall financial market; however, some positive interactions are captured in five sectors of industrials, health care, metals and mining, materials, and resources. The result shows that all industries that benefited from government financial assistance are either shielded or less severely affected by the pandemic. While sectors that did not directly receive financial remedies relatively showed no enhancement in their overall performance. Having achieved short-term success in helping the economy, the government recorded an all-time high deficit since 2004 that might eventually lead to adverse effects on the overall economy. The Australian equity market is found to be rationally distinct to the crude oil price risk, while positive correlations between AUD/USD rate and real estate-related sectors are reported.
Highlights
The overall economies, especially, the financial markets speedily reflect the information of all major events
The results of unit root test (ADF and PP tests) suggest that all data series are stationary, which means that those variables follow the random walk
This study examines the impacts of COVID-19 on the Australian financial market by considering the adverse impacts of twenty stock market indices over the period 26 January
Summary
The overall economies, especially, the financial markets speedily reflect the information of all major events. It is exceedingly anticipated that the COVID-19 pandemic will have ominously unpredictable effects across the Australian industries This contagion worsens the level of uncertainty and confidence, augments the risk aversion, and accumulates the disorder in overall financial markets (Zhang et al 2020). We capture the effects of COVID-19 on the financial market by including the interactions between infected rate and three indicators of Australian government intervention, the foreign exchange market, and Brent crude oil prices. Our findings indicate that the overall Australian stock markets react intensely with negative returns to the daily increase in COVID-19 confirmed cases. From different regimes in terms of sectoral analyses, this study explores the overall Australian financial market with respect to the COVID-19 pandemic.
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