Middle East War Ends, Boosting Global Markets and Spanish Stocks

Monday brought euphoria to international financial markets after the announcement of an agreement between the Trump administration and the Republic of Iran to end the war in the Middle East. The Spanish stock market opened as one of the main players of the day. The Ibex 35 smashed through all resistance levels, brushing a new all-time high as it broke through the 19,000-point mark, reaching 19,122 points. With this latest surge, the blue-chip index has now accumulated a rise of around 10% since the start of the year.

The agreement between the United States and Iran brings an end to the military escalation that had kept the Middle East on edge and was threatening global macroeconomic stability.

The Strait of Hormuz reopens to global trade

The economic linchpin of the bilateral deal is the immediate reopening of the Strait of Hormuz. This maritime channel is one of the world’s key logistical choke points, through which a fifth of the oil consumed worldwide passes, along with vast volumes of consumer and industrial goods.

Since the outbreak of the conflict, the blockage of this shipping lane had choked global supply chains and sent the price of crude oil soaring to unsustainable levels, fuelling fears of a new inflationary crisis.

The announcement that commercial maritime traffic will resume has triggered an automatic slump in the price of Brent crude, which fell by more than 4% before the market opened, after having risen sharply during the months of hostilities. However, it is still trading above its level before the conflict began.

Ibex 35 under the microscope: who is leading the gains?

The easing of geopolitical tensions has rekindled risk appetite among investors in the Spanish blue-chip index, particularly benefiting banks and major companies such as Inditex:

Tourism and airlines: Stocks such as IAG (the parent company of Iberia and Vueling, which has come close to a 5% rise), Meliá Hotels and Amadeus are posting steep gains. The drop in fuel prices and the return of geopolitical stability are boosting expectations for the summer season.

Banking: The big financial institutions (BBVA up 3.14%, Banco Santander climbing 3.48% and CaixaBank 1.18% higher) are acting as the engine of the index, benefiting from broad-based optimism and fading recession fears.

Industrial, consumer, telecoms and energy groups: Lower energy and logistics costs are giving some breathing space to the margins of companies most exposed to commodities. Inditex is up 2.07%, Iberdrola 0.30% and Telefónica 0.68% at the opening bell.

Europe joins the stock market rally