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An Empirical Note on Weather Effects in the Australian Stock Market *
Author(s) -
Worthington Andrew
Publication year - 2009
Publication title -
economic papers: a journal of applied economics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 19
eISSN - 1759-3441
pISSN - 0812-0439
DOI - 10.1111/j.1759-3441.2009.00014.x
Subject(s) - equity (law) , stock market , stock exchange , stock (firearms) , economics , environmental science , finance , geography , political science , law , context (archaeology) , archaeology
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.