IBEX 35 Shifts from Banking to Energy and Defense as Index Hovers Near 17,600 Points

The Spanish IBEX 35 index, up 26.5% year‑to‑date, opened 2026 with modest 2.6% growth and signs that its banking‑driven rally is waning. Major banks that previously lifted the index—Santander, BBVA and CaixaBank—are seeing slower gains, with BBVA down about 4.4% and Sabadell also retreating while Santander edges up only 1.9%. The Eurozone’s deposit rate remains at 2% and the refinancing rate at 2.15%, reducing the profit margin boost that had powered banks’ results. In response, banks have launched sizeable share‑buyback programmes, but analysts say the market now demands real earnings growth from other sectors.

Energy companies are emerging as the new drivers, led by Repsol (+42.9% YTD), Endesa (+18.5%) and solar player Solaria (+35%). Their appeal lies in strong cash flows, dividend capacity and resilience to geopolitical and inflationary pressures. Defense is also gaining attention, with Indra posting a 28% first‑quarter profit as Europe ramps up a €800 billion re‑armament fund. Health stocks such as PharmaMar (+25.5%) and Rovi are seen as defensive bets amid a cooling cycle.

On a recent trading day that coincided with Madrid’s San Isidro festival, the index slipped 1.05% to around 17,600 points, pressured by declines on Wall Street, weaker European markets and a more than 3% rise in oil prices.