Five Drivers Behind the Ibex 35's Strength in 2026

Five Tailwinds Behind the Ibex's Rally

Spain's Ibex 35 is being propped up by five distinct supports, according to analysts cited by Expansion: a strong second-quarter earnings season, the heavy weight of banks in the index, a resilient domestic economy, falling oil prices and a wave of share buybacks. Each factor reinforces the others, giving the index a sturdy base even as some strategists warn of short-term volatility.

The earnings story is led by banks, which account for the largest sector weight in the index — put at around 40% in the article, and elsewhere described as close to a third. Supported by higher interest rates, Spanish lenders have posted a record combined profit of more than €20 billion. Ramón Forcada, head of research at Bankinter, calls these results the true "keystone" of stock market valuations. Analysts say European companies are beating forecasts and that profit estimates for 2026 and 2027 are still being revised upward, which reduces the risk of a deep correction.

Monetary policy is playing an unusual role for the index. Although higher rates normally weigh on equities, the Ibex's heavy banking exposure turns an expected ECB rate hike in September into a positive catalyst, because it would let lenders keep improving margins. The economy adds another layer of support: Banco Sabadell says the environment remains favorable, and Auriga points to structural demand from energy infrastructure and data-centre investment, driven by the electricity needs of artificial intelligence. That trend benefits energy companies, builders and even real estate, all of which carry significant weight in the Spanish market.

Geopolitics could tip the balance further. Experts quoted in the article expect the United States to push for some kind of agreement with Iran before November's legislative elections. Greater stability in the Middle East would lower oil prices, boosting competitiveness in industry, construction and tourism, while shifting some market leadership away from Repsol, which has acted as a refuge during the crisis. In parallel, ACS, BBVA, Repsol and Banco Sabadell have announced new buyback programmes, which reduce the number of shares in circulation and support earnings per share. The main risks, Sabadell cautions, are the market's accumulated gains, uncertainty around the Strait of Hormuz and summer seasonality — pointing to a choppy, zigzag market where corrections are seen as buying opportunities as long as earnings keep rising.

Banks, Buybacks and the Geopolitical Swing Factor

The following separates reported facts from analyst interpretation. The data points — record bank profits, the ECB's meeting calendar, the list of buybacks — are verifiable; the scenarios around oil, geopolitics and market direction are forecasts by the named strategists.

Why the Bank Weight Flips the Rate Narrative

The standard equity logic is that higher interest rates squeeze valuations. In Spain's case, the composition of the Ibex inverts that logic. With banks representing roughly a third to 40% of the index, an ECB hike in September would flow straight into lender margins. Ignacio Zarza of Auriga makes exactly that point: higher rates allow financial institutions to keep improving profitability, and because banks dominate the index, their margin gains mechanically lift the whole selectivo. This is not a general market call — it is a sector composition argument specific to Spain.

Record Q2 Earnings Give Analysts Cover

The more than €20 billion combined bank profit, described as a record, is the factual anchor behind the bullish positioning. Bankinter's Ramón Forcada calls it the "keystone" of valuations, while the broader European earnings picture — companies beating forecasts and 2026-27 estimates rising — is used by analysts to argue that the risk of staying out of the market is greater than the risk of staying invested. That judgment is interpretative, but it rests on a concrete base: if revisions turn negative, the "buy the dip" argument weakens quickly.

The Geopolitical Swing Factor: Oil, Repsol and the Cycle

The article's most actionable scenario is geopolitical. Analysts expect the US to seek an agreement with Iran before November's legislative elections, which would ease Middle East tensions and push crude prices down. The implied trade is a rotation: Repsol, which has acted as a defensive refuge, would lose some of its crisis premium, while more cyclical sectors such as industry, construction and tourism would gain competitiveness. This is a relative-value call within the index, not a forecast of where oil must go — the Strait of Hormuz remains an explicit risk on the downside.

AI Infrastructure as a Structural Bid

BlackRock, the world's largest asset manager, is cited as backing the longer-term investment story: artificial intelligence is surging electricity demand, and the resulting build-out of energy infrastructure and data centres is a structural tailwind for Spanish energy, construction and real estate stocks. Unlike the earnings cycle, this support is not tied to a single quarter or central bank meeting — it is an investment-trend argument that could persist even if the monetary tailwind fades.

Buybacks and the Risks Still Priced

ACS, BBVA, Repsol and Banco Sabadell have all announced new buyback programmes. Zarza's point is mechanical and verifiable in impact: fewer shares in circulation means higher earnings per share for the same profit, which helps consolidate the index's gains. Yet Banco Sabadell's warning anchors the other side — accumulated gains, Hormuz uncertainty and typical summer thinness argue for caution in the very short term. The two views are not contradictory: buybacks support the medium-term floor, while seasonality explains why the path higher is unlikely to be straight.

What to Watch on the Ibex From Here

• Watch the ECB's September rate decision: a hike would extend Spanish banks' margin expansion and, given their index weight, likely lift the Ibex; confirmation of a pause would remove a key pillar.
• Track the next round of profit revisions for 2026 and 2027 — analysts' "corrections are buying opportunities" call depends on estimates staying on an upward path.
• Monitor execution of the announced buybacks at ACS, BBVA, Repsol and Banco Sabadell, since reduced share counts directly support earnings per share and index levels.
• Follow crude oil and Strait of Hormuz headlines: a US-Iran agreement scenario would likely shift leadership from Repsol toward industry, construction and tourism stocks.
• Expect zigzag, volatile summer trading; treat pullbacks as entry points only if earnings momentum and buyback announcements remain intact.