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Do markets react to weather? Stock price reactions to weather alerts

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  • Panetsidou, Styliani
  • Synapis, Angelos

Abstract

This paper examines the impact of weather alerts on stock prices. Using an event-study methodology, we show that the market responds negatively to weather alerts. This reaction is more pronounced when alerts indicate severe impact or involve multiple weather phenomena. Furthermore, firms operating in weather-sensitive industries as well as smaller, high-risk and high-growth firms listed on the junior growth market, experience significantly more negative stock returns. However, frequent updates about the alerts mitigate the negative market impact. Overall, the findings suggest that investors incorporate weather alerts into asset pricing, highlighting the importance of providing regular information during extreme weather events.

Suggested Citation

  • Panetsidou, Styliani & Synapis, Angelos, 2025. "Do markets react to weather? Stock price reactions to weather alerts," Economics Letters, Elsevier, vol. 255(C).
    • Handle: RePEc:eee:ecolet:v:255:y:2025:i:c:s016517652500388x
    DOI: 10.1016/j.econlet.2025.112551
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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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