The Spanish stock market sees its best performance in 32 years: annual increase reached 50%, leading major European markets.

The Spanish stock market is expected to experience its best performance since the early 1990s, as strategists predict that there will be more gains in the future due to increasingly clear profit prospects. As of the Tuesday close, the Spanish benchmark IBEX 35 index has risen 50% year-to-date, the largest annual increase in 32 years, making it the best-performing major market in Europe. Profit growth expectations for Spanish companies have been raised by over 15% this year, exceeding other regions in Europe. Due to relatively small impacts from the US market and Trump's trade tariffs, the Spanish stock market is currently at historical highs. Low unemployment and moderate inflation have also helped Spain secure upgrades from three major credit rating agencies this year. Mabrouk Chetouane, Global Market Strategy Director of Natixis IM Solutions, stated in a speech in Madrid on December 11th that profit prospects have made the Spanish stock market "completely different, driven by some fundamental and stable factors." Banking stocks have contributed to most of the gains, with six of the top ten performing companies being loan institutions, led by Banco Santander SA, Unicaja Banco SA, and BBVA SA, all of which have seen their stock prices more than double over the past year. Banco Santander and BBVA are currently the two largest banks in the EU by market capitalization. Meanwhile, the top-performing stocks on the IBEX index have benefited from strong demand from investors for defense companies, as Europe is rearming in the midst of the Russia-Ukraine conflict. Indra Sistemas SA, which provides sensors, radars, and other electronic systems for aircraft, ships, and armored vehicles, has seen its stock price soar 185% by 2025. This recent surge has brought the valuation of the Spanish stock market to no longer seem cheap, with the current price-to-earnings ratio of the benchmark index at around 14 times, higher than its long-term average valuation level. However, compared to the broader STOXX 600 index in Europe, there is still a discount of nearly 8%. Chetouane of Natixis stated that strong demand for credit from businesses and households suggests that the IBEX index still has room for growth in 2026. He said, "The fundamentals remain favorable."