Does the Weather Influence Global Stock Returns?

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 index returns separately for each region (cold, hot, and mild countries) and month. We find strong effects of all five weather variables in 49 countries from 1973 to 2012, 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