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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.

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
    DOI: 10.1111/j.1759-3441.2009.00014.x
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    4. Stefanescu Razvan & Dumitriu Ramona, 2021. "The Extended Holiday Effects on Bucharest Stock Exchange during Coronavirus Pandemic," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 293-303.
    5. Ivana Štulec, 2017. "Effectiveness of Weather Derivatives as a Risk Management Tool in Food Retail: The Case of Croatia," IJFS, MDPI, vol. 5(1), pages 1-15, January.
    6. Anya Khanthavit, 2017. "Instrumental-Variable Estimation of Bangkok-Weather Effects in the Stock Exchange of Thailand," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 13(1), pages 83-111.
    7. 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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