Examining The Effects Of COVID-19 On Financial Markets: Evidence From Oil, Gold, Islamic, And Conventional Stock Markets

Abstract

The effects of the COVID-19 outbreak have been severe on financial markets worldwide, resulting in high volatility and fluctuations in asset prices. This study examines the impact of COVID-19 across three periods—pre-COVID-19, during COVID-19, and post-COVID-19—on four vital financial assets: Dow Jones Islamic stocks, Dow Jones conventional stocks, oil, and gold. Using the econometric models such as the ADF test, PP test, VAR model, Granger causality test, and the ARCH model, the study shows that all the asset classes under consideration have indeed increased their volatility during the pandemic while some of them are still struggling to recover pos[1]t COVID. Islamic stocks were comparatively less volatile because of the ethical principles of Shariah investing, and new conventional stocks were higher post-pandemic. Oil prices were very volatile, with negative prices at specific points in the year, while gold prices went through the roof, proving its role as a safe-haven asset. Hence, the need to diversify and have a formidable financial plan when confronting international disasters cannot be overemphasized.