Monday marked a historic session for the Madrid stock exchange as the Ibex 35 smashed through the 19,000-point barrier, reaching a record 19,122 points. The rally was triggered by the announcement of a framework agreement between the Trump administration and the Islamic Republic of Iran to end the war in the Middle East, a conflict that had kept global markets on edge for months.
The benchmark index has now gained roughly 10% since the start of the year, driven by a sudden easing of geopolitical tensions that had threatened to derail the global economic recovery. The deal's centerpiece is the immediate reopening of the Strait of Hormuz, a narrow waterway through which approximately one-fifth of the world's oil supply transits, along with vast quantities of consumer and industrial goods.
Oil Prices Plunge as Supply Chains Unblock
The blockade of the Strait of Hormuz during the conflict had choked supply chains and sent crude prices soaring to unsustainable levels, stoking fears of a renewed inflationary spiral. With the announcement that commercial shipping will resume, Brent crude futures dropped more than 4% before the opening bell, though they remain above pre-conflict levels. The relief was palpable across European trading floors, where the Dax in Frankfurt, the CAC 40 in Paris, and the Euro Stoxx 50 all opened sharply higher.
Investors welcomed the removal of a risk that had threatened to abruptly brake global economic growth in the second half of the year. The agreement draws a line under the military escalation that had kept the Middle East on a knife-edge, as previously covered in our earlier reporting on the Hormuz crisis.
Who Is Leading the Ibex 35 Rally?
The easing of tensions has revived risk appetite, particularly benefiting sectors most exposed to fuel costs and geopolitical uncertainty. Tourism and airline stocks posted vertiginous gains: IAG, the parent company of Iberia and Vueling, came close to a 5% rise, while Meliá Hotels and Amadeus also surged. Falling fuel prices and the return of stability are boosting expectations for the summer season.
Banking heavyweights acted as the engine of the index. BBVA rose 3.14%, Banco Santander climbed 3.48%, and Caixabank gained 1.18%, buoyed by broad-based optimism and the fading risk of recession. Industrial, consumer, telecommunications, and energy companies also benefited from lower energy and logistics costs. Inditex was up 2.07%, Iberdrola added 0.30%, and Telefónica rose 0.68% at the opening.
The rally extended beyond Spain. European stock exchanges mirrored the upbeat mood, with the Dax and CAC 40 both recording strong gains. The agreement effectively removes a major geopolitical risk that had been hanging over the continent's economic outlook, especially after EU energy ministers had considered releasing jet fuel reserves to mitigate the crisis.
While the immediate market reaction is euphoric, analysts caution that the deal remains a framework and that implementation details could still cause volatility. Nevertheless, for now, the Ibex 35's record high signals a renewed confidence in European equities, as the continent's investors breathe a collective sigh of relief.
