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

Styliani (Elina) Panetsidou; Angelos Synapis

doi:10.1016/j.econlet.2025.112551

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

Research Centre for Resilient Business and Society

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1 Citation (Scopus)

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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.

Original language	English
Article number	112551
Number of pages	5
Journal	Economics Letters
Volume	255
Early online date	6 Aug 2025
DOIs	https://doi.org/10.1016/j.econlet.2025.112551
Publication status	Published - Sept 2025

Bibliographical note

Open access CC-BY

Funding

We are grateful to Mariano Massimiliano Croce (the editor) and an anonymous reviewer for their insightful comments. We thank Yilmaz Guney, Alaa Alhaj Ismail, Thang Nguyen and Daniel Santamaria, for their comments in prior versions of this study. We also thank the participants at the 2024 Hellenic Finance and Accounting Association (HFAA) conference and the Centre for Financial and Corporate Integrity (CFCI) seminar series for their helpful comments. We are also grateful to Zhongxue Wu for the excellent research assistance. This study has been partly funded by the British Academy and Leverhulme Trust.

Funders
Leverhulme Trust
British Academy

Keywords

Event-study
Stock market
Stock performance
Weather alerts

Access to Document

10.1016/j.econlet.2025.112551Licence: CC BY

Synapis2025VoRFinal published version, 734 KBLicence: CC BY

Cite this

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title = "Do markets react to weather? Stock price reactions to weather alerts",

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.",

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AB - 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.

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

Abstract

Bibliographical note

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Keywords

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