Spain’s benchmark stock index, the Ibex 35, fell on Wednesday as tensions in the Gulf pushed oil prices higher. After opening down about 0.65%, it extended its losses through the morning, falling around 1.1% to about 19,437 points.
Why markets were nervous
- The Gulf. A Qatari oil tanker was hit by a projectile in the Strait of Hormuz. The United States responded by withdrawing permission for some Iranian oil sales and announcing “strong” action against Iran.
- Oil prices. The incident drove crude prices up. Higher energy costs can squeeze company profits and feed inflation.
- The Fed. Investors were also waiting for the minutes of the US Federal Reserve’s latest meeting, at which interest rates were held at 3.50–3.75%.
Winners and losers
| Biggest falls | Biggest rises | ||
|---|---|---|---|
| Endesa | -3.2% | Repsol | +3.9% |
| IAG | -1.8% | Solaria | +0.5% |
| Sabadell | -1.8% | Naturgy | +0.4% |
| Acerinox | -1.7% |
Repsol, as an oil company, benefited from higher crude prices. Airlines such as IAG, the owner of Iberia and Vueling, suffer when fuel costs rise.
Elsewhere in Europe
- London’s FTSE 100: -0.7%
- Frankfurt’s DAX: -1.1%
- Paris’s CAC 40: -0.9%
Bonds and currency
The yield on Spain’s 10-year government bond rose to 3.525%, and the euro edged up against the dollar to around $1.142.
Why it matters
The Strait of Hormuz is one of the world’s most important routes for oil and gas, and any threat to shipping there is quickly felt in energy prices. For the Balearics, higher oil prices feed through into fuel costs and airfares, which matter for an economy that depends on air travel.
