Heat Wave Impact on Stock Market

Heat Waves and Sectors

It has often been said that while a normal summer may not create much of an impact on the equity markets, the recurrence of heat waves can bring about a disruption, leading to a fall in stock prices. To test the validity of such a theory, we carried out a study taking historical records and other data into consideration. The conclusion is interesting, to say the least 

April, fortunately, turned out to be a month in favour of investors. In fact, it almost seemed as if the magic was back to working its spell in the stock market. All the equity indices closed in the green except for the IT sector which closed marginally lower in this month. However, despite all the gains made in April, given the year-till-date data, most of the equity indices are still trading in the red. The reason is that in the first three months of 2023 we saw the indices giving negative returns in a row. There were various factors that led to such poor performance of the market in the first quarter of 2023, including the banking crisis on both sides of the Atlantic, which reminded many of the ‘great financial crisis’ (GFC) of 2008. Investors feared the contagion impact and its repercussions were felt globally, thereby affecting the global equity markets.