Ibex 35: The Spanish stock market differs from Europe with a sharp decline driven by the banking sector and renewable energy after Trump’s victory | Financial markets

Markets reacted mixedly to Donald Trump’s return to the White House following his landslide election victory. The Spanish stock market is practically the only one on the Old Continent, along with the Italian one, to suffer losses after the victory of the Republican leader. The final vote count confirmed he will be inaugurated as the 47th president of the United States in January after the Republican cleared Democratic challenger Kamala Harris.

Selling today is driven by Spanish prices: the Ibex 35 index corrects by more than 2% and loses 11,600 points, while the Italian FTSE Mib falls by 0.2%. The rest of Europe adds insignificant positions. The FTSE 100 index in London added 1%, the Cac in Paris rose 0.9% and Germany’s Dax rose half a percentage point.

The worst performer in the Spanish index was BBVA, which fell more than 6% due to a weakening Mexican peso, where the company does most of its business. CaixaBank, Sabadell and Unicaja are losing more than 5%, in line with the rest of the sector. “The dollar’s strength after Trump’s victory poses significant pressure on emerging economies, many of which have dollar-denominated debt,” explains IG’s Avila.

The analyst adds that “as the dollar strengthens, the cost of repaying this debt in local currencies increases, creating a greater financial burden on these countries. Likewise, a stronger dollar attracts capital to the US, causing capital outflows from emerging markets and reducing liquidity in those economies.”

This situation also has direct consequences for large Spanish banks due to their heavy dependence on developing countries, especially in Latin America and Turkey. Banks such as BBVA and Santander with significant operations in these markets may find their revenues and profits impacted by volatility and rising borrowing costs in these regions.

Renewables are also suffering in the stock market. The European renewable energy sector index fell 2.25%. In the sector, wind turbine maker Vestas is down 11%, Ørsted, the world’s largest offshore energy developer, is down 10.7% and Enel and EDP are down 5.6% and 5.1% respectively. Trump promised to kill offshore wind projects by executive order on his first day in office. On the Spanish stock market, Solaria and Grenergy fell more than 5%, while Acciona and Acciona Energía lost 5.8% and 4.4% respectively. Although Iberdrola’s shares are down 2.6% on the Spanish stock market, this gives them away much of the points that forced Ibex to accept such a sharp decline. The company, led by Ignacio Sánchez Galán, has a significant presence in the US, which you say is “the central market for Iberdrola, and we have organic investment commitments of over $30 billion by 2030, which we hope to meet at any time.” scripts.” Avangrid’s business is 80% grids, and the rest is renewable energy sources with guaranteed support,” company sources explain.

Automakers also responded by losing money to the Republican victory as they could be impacted by a possible tariff war. The Stoxx 600 auto sector is down about 2%. Within the index, the biggest losses were suffered by BMW, which lost 6.1%. The German automaker reported a 61% drop in quarterly profit in the third quarter, missing analysts’ expectations. On the Spanish market, shares of engine component maker Gestamp are down 7.4%.

“Donald Trump’s recent proposal to introduce tariff measures could trigger a global trade war, especially affecting the European Union. If these tariffs are applied, strategic sectors such as automotive and technology in Europe will be severely damaged, affecting the region’s economic growth,” explains Sergio Avila, an analyst at IG.

The expert believes that the decline in economic activity will also affect the European banking business, as the weakening of these key sectors reduces investment and demand for commercial loans.

On the other hand, increased pressure on EU defense budgets during the Trump presidency could support European defense stocks, UBS strategists including Matthew Gilman said in comments published by Bloomberg.

However, shorter-term support for Ukraine could be negative, they added. Overall, European defense stocks are up today, including Rolls Royce (+3.8%), Rheinmetall (+1%), BAE Systems (+3.2%) and Leonardo (+2.6%).

In the Spanish stock market, Acerinox, which has a significant presence in the US, is one of the most bullish with growth of 3.6%. ArcelorMittal shares, in turn, rose 2.3%. Javier Cabrera, an analyst at XTB, explains that both companies could benefit from US tariff policy.

The healthcare sector is also one of the most optimistic today. The health sector is also celebrating Trump’s victory. Among the most bullish companies were Siemens Healthineers, up 7.6%, followed by Novo Nordisk, which performed better than expected and rose 7%. Zealand Pharma rose 3.5%, followed by Fresenius with a 2.7% return.