Critical Finance Review > Vol 10 > Issue 2

Does the Weather Influence Global Stock Returns?

Ming Dong, Schulich School of Business, York University, Canada, , Andréanne Tremblay, Laval University, Canada,
Suggested Citation
Ming Dong and Andréanne Tremblay (2021), "Does the Weather Influence Global Stock Returns?", Critical Finance Review: Vol. 10: No. 2, pp 207-249.

Publication Date: 24 Jun 2021
© 2021 Ming Dong and Andréanne Tremblay
WeatherStock returnsTemperature regionSeasonBehavioral economicsInvestor psychology


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In this article:
1. Introduction 
2. Hypotheses 
3. Sample and Research Design 
4. Discussion of the Weather Effects 
5. Robustness Tests 
6. Conclusion 
Appendix A 


We hypothesize that weather’s emotional effects depend on climate and season, and examine the relation between weather (sunshine, wind, rain, snow, and temperature) and daily index returns separately for each region (cold, hot, and mild countries) and month. In a large sample from 49 countries from 1973 to 2012, we find strong effects on stock returns of all five weather variables and all but the sunshine effect vary across temperature regions and seasons. The systematic patterns of weather effects across climates and seasons suggest that weather influences stock returns through investor mood, and that the emotional effects of the weather are stronger and more pervasive than previously documented. Our results reveal two contrasting themes of the weather–return relationship: comfortable weather conditions promote positive affect and lead to higher returns especially during seasons of increased outdoor activity, but extreme low temperature in the winter elevates risk taking and leads to higher returns.