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An Empirical Note on Weather Effects in the Australian Stock Market

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  • Andrew Worthington

Abstract

The behavioural finance literature posits a link between the weather and equity markets via investor moods. This paper examines the impact of weather on the Australian stock market over the period 1958-2005. A regression-based approach is employed where daily market returns on the Australian Securities Exchange's All Ordinaries Price Index are regressed against eight daily weather observations (precipitation, evaporation, relative humidity, maximum and minimum temperatures, hours of bright sunshine, and the speed and direction of the maximum wind gust) at Sydney's Observatory Hill and Airport meteorological stations. Consistent with studies elsewhere including the Australian market, the results indicate that the weather has absolutely no influence on market returns. Some directions for future research that may help address some of the deficiencies found in this intriguing body of work are provided. Copyright (c) 2009 The Economic Society of Australia.

Suggested Citation

  • Andrew Worthington, 2009. "An Empirical Note on Weather Effects in the Australian Stock Market," Economic Papers, The Economic Society of Australia, vol. 28(2), pages 148-154, June.
  • Handle: RePEc:bla:econpa:v:28:y:2009:i:2:p:148-154
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    References listed on IDEAS

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    Cited by:

    1. Ivana Štulec, 2017. "Effectiveness of Weather Derivatives as a Risk Management Tool in Food Retail: The Case of Croatia," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 5(1), pages 1-15, January.
    2. Michael Nofer & Oliver Hinz, 2015. "Using Twitter to Predict the Stock Market," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(4), pages 229-242, August.

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