Madrid’s IBEX 35 stock index closed at 17,074.4 points on Friday, marking its worst weekly performance since February 2022, when Russia invaded Ukraine. The index fell by 7% over the five trading days, a decline mirroring anxieties over escalating tensions in the Middle East following recent attacks in Iran.
The downturn was particularly acute for Spanish banking stocks, which collectively lost approximately 33 billion euros in market capitalization, representing a nearly 9% drop, according to reports. This sector had previously been a leading driver of gains in the national stock market.
Contributing to the market instability, the price of crude oil surpassed $90 a barrel amid fears that the conflict could disrupt supply routes. Concerns center on the potential closure of the Strait of Hormuz, a critical waterway for global oil shipments. Kuwait has already halted crude production and authorities in Qatar have warned of potential export disruptions, further fueling price increases.
Acciona experienced the largest percentage decline among companies listed on the IBEX 35, falling 14.6% due to its exposure to the Middle East. Other companies heavily impacted included Inditex, down 9.4% for the week, and IAG, which lost over 13%.
The European Central Bank faces a complex situation. Prolonged high energy prices, resulting from potential supply disruptions, could necessitate maintaining elevated interest rates for an extended period. This, in turn, could hinder economic recovery and negatively impact bank profitability.
BlackRock’s recent exit from Naturgy has strengthened IFM’s position and prompted Criteria to seek a partner to reinforce its control of the energy company. This development occurred against the backdrop of broader market uncertainty.
The IBEX 35’s decline follows a period of strong performance earlier in the year, driven by positive corporate results. However, the recent escalation of conflict in the Middle East has erased those gains, leaving the index down 1.35% year-to-date.
Other major European stock exchanges also experienced declines on Friday, with London falling 1.33%, Paris down 0.86%, Frankfurt dropping 1.13%, and Milan declining 1.14%.
