The effect of Eurozone carbon futures price on stock market price performance
Abstract
The contemporary central role of carbon compliance in business operations on financial markets is garnering impetus with expansions in carbon compliance.
The objective of this paper is to examine the effect of Eurozone Carbon Futures Market (Carbon Emissions Futures [CFI2M5]) price on EU Stock Market (Euro Stoxx 50 - STOXX50E) Price Performance.
Problem statement. research on the interaction between the Carbon Emissions Futures Market and the financial market is growing with diversity of findings among researchers from different economic regions.
Purpose of the article. The goal of this article therefore is to evaluate whether the price of Carbon Futures market affects the price of conventional stock market, the magnitude and the direction of the impact.
Unresolved aspects of the problem. Existing gap in the problem is on the scarcity of focussed research on Carbon Futures price and Stock Market price within the Eurozone, which is the global pace setter of carbon market.
Presentation of the main material. Data for the analysis was collected over a period of 124 days between January and June 2025 for EU Carbon Futures (CFI2M5) and EU stock market (STOXX50E). The data was analysed using the simple regression model.
Conclusions. Findings show a P-value of 0.006, which is lower than the test alpha of 0.05 with regression coefficients of 9.977 which thus indicates a significant and positive relationship. This shows that a 1% increase in the EU Emissions Futures is likely to cause a 9.977 increase in the Euro Stoxx 50 price. The paper provides important implication for corporate decision makers, and Carbon Futures and stock market analysis and participants. It provides an agenda for further research to examine intercontinental variations between carbon futures market and stock market.
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