Analysis of the Spanish stock market in 2025: What to expect from the Ibex 35 in the short term?

The Current Momentum of the Ibex 35: a Historic Low Under Technical Pressure

The Ibex 35 has experienced a memorable 2025. Between mid-November and mid-December, the Spanish select index reached all-time highs by surpassing 17,000 points, a milestone never seen before in the index’s history. With a close around 16,850 points, the market reflects persistent risk appetite, although signs of technical consolidation are beginning to emerge that could anticipate a short-term pause.

This rise is not due to chance. The financial sector — led by Santander, BBVA, and CaixaBank — has acted as the locomotive of the movement, driven by robust interest margins and expectations of regulatory stability. Simultaneously, cyclical and industrial stocks like Ferrovial and Sacyr have benefited from confidence in the Spanish economic recovery, while foreign capital flows have found the relatively cheap PER of the Spanish index attractive compared to European peers.

Technical Mapping: Where the Ibex 35 Could Go

To understand the short-term trend of the stock market, it is essential to identify key levels that will mark the next move:

Resistance zone: 17,000 – 17,200 points. This level has proven to be a psychological and technical ceiling; each attempt to break through triggers profit-taking.

Critical support level: 16,600 – 16,700 points. A fall below this zone would open a bearish potential toward 16,400.

Extended bullish target: 17,300 points, which would require a confident break of the main resistance without significant retracements.

The expected range for the fortnight from December 15 to January 15 suggests contained sideways movements, without a clear direction. Technical indicators show RSI near oversold in some segments, while Bollinger bands remain narrow, confirming a congestion phase.

Catalysts Driving the Spanish Select Index

Beyond the charts, there are fundamental narratives behind this rally:

Banking in winning mode: The quarterly results of major Spanish banks have exceeded expectations, with BBVA and Santander signaling share buybacks and improved dividend announcements. This capital return policy reinforces the appeal for institutional investors.

Ferrovial’s surge on Nasdaq-100: The announcement of the construction giant’s entry into the North American index has attracted international flows into the Spanish market, indicating that the domestic business fabric is gaining relevance in global portfolios.

Energy under a new order: Companies like Iberdrola and Endesa enjoy a predictable regulatory environment in Spain, in addition to benefiting from multimillion-dollar investment plans in renewables and distribution networks.

Macroeconomic sentiment: Disinflation in the Eurozone, with harmonized inflation in the stability zone, has given the European Central Bank room to maintain a cautious tone that favors risk-taking.

Retrospective: How the Ibex 35 Reached These Highs

To appreciate the magnitude of the movement, it is worth recalling the recent journey:

In September-October, the index was consolidating between 15,400 and 15,700 points. The banking sector was recovering after uncertainty caused by BBVA’s failed takeover of Sabadell, an event that paradoxically strengthened sentiment by clearing risks of complicated integration.

August-September marked a turning point: Inditex, the largest weight in the index with a 15.48% weighting, posted solid results that propelled the index toward 15,300 points. The more favorable global climate due to expectations of rate cuts in the U.S. amplified the movement.

In June-July, the outlook was more chaotic. The ECB’s announcement of rate cuts generated optimism, but weak sales results from Inditex and geopolitical tensions in the Middle East slowed the advance. The index oscillated between 13,880 and 14,250 points.

May-June saw volatility caused by geopolitical conflicts and mixed corporate data. Inditex again was responsible for setbacks after announcing results below expectations.

This journey from 13,780 points in June to 17,000 in December represents an accumulated increase of nearly 23% in just six months, positioning the Ibex 35 as one of the best-performing indices in Europe during 2025.

Structure of the Ibex 35: Who Moves the Index

The index is dominated by a handful of heavy caps:

Inditex leads with 15.48% weight, followed by Iberdrola (13.83%) and Banco Santander (12.13%). Together, these three companies account for over 41% of the index. BBVA adds another 9.36%, consolidating the influence of the financial sector.

The sector composition reveals exposure to cyclical industries: financial services, energy, telecommunications, and construction. This structure explains why the Ibex 35 tends to amplify bullish movements during economic growth periods, but also why it suffers deeper declines than less cyclical indices during uncertainty phases.

Short-Term Market Trend Scenarios

Bullish scenario: Break above 17,200 points would open the way toward 17,300-17,400, driven by continued bank dividend payments, solid results from utilities, and improved Spanish macroeconomic data.

Lateral scenario: Oscillation between 16,600 and 17,000 points for several weeks, typical of markets seeking to consolidate gains. In this case, active traders could exploit rebounds at supports and profit-taking at resistances.

Bearish scenario: Falling below 16,600 points would trigger accelerated selling, especially if accompanied by negative macro surprises or disappointing corporate results. A monthly close below 16,200 would put higher highs at risk.

Risks Facing Investors in January

Not everything is rosy. Several factors could disrupt the current euphoria:

Global tariff pressure: Escalation of tariffs between major economies could affect Spanish exporters, mainly Inditex and industrial companies.

German industrial slowdown: Sustained weakness in Germany would reduce demand for Spanish goods and compress corporate margins.

Hawkish shift by the ECB: If the European Central Bank surprises with a less dovish tone or delays rate cuts more than expected, the appeal of European emerging markets would evaporate.

Geopolitical volatility: Tensions in the Middle East or political surprises could trigger episodes of risk aversion that particularly affect indices exposed to economic cycles.

Medium and Long-Term Outlook for the Ibex 35

Looking beyond the short term, the Ibex 35 faces a nuanced landscape. The projections of the Bank of Spain point to a GDP growth of 1.9% for 2025, driven by tourism, exports, and employment. However, private consumption remains fragile, limiting sustained upside potential.

The banking sector, despite its current dominance, will face pressure as interest rates continue to decline. The interest margins that fueled record profits in 2024 inexorably compress, forcing banks to seek new sources of profitability.

Balancing this, renewable energy companies emerge as a long-term opportunity. Electricity consumption driven by artificial intelligence and data centers could account for up to 3.2% of supply by 2030, according to estimates. Companies like Solaria, Acciona Energía, and Iberdrola are positioned to capitalize on this boom.

Globally, recession risk hovers around 45% for 2025, according to several analysts. The behavior of gold — which has risen over 20% in 2024 and is expected to reach $2,700 per ounce in 2025 — acts as an alert indicator of potential volatility.

All in all, European stimuli derived from the Draghi plan for digitalization and decarbonization provide an important cushion for the Spanish market, opening windows of opportunity for patient investors willing to tolerate short-term volatility.

Summary: What to Do in the Current Situation

The Ibex 35 is navigating a moment of tension between euphoria and technical consolidation. In the short term, the stock market trend suggests lateral movements with a higher probability than sustained breakouts. Active traders can exploit clearly defined resistance and support levels. Medium-term investors should consider that recent highs offer tactical selling opportunities in overextended positions, while dips toward 16,600-16,400 could be attractive entry points for fresh capital, given the quality of some index companies and the probable decrease in volatility in 2026 if monetary normalization projections are met.

The key is not to fall in love with all-time highs. In the stock market, these are merely confirmations that the market was efficient in the past, not guarantees of the future.