Spanish equities finished the week on a positive note, with the IBEX 35 index climbing 0.94% to settle at 18,186 points. The rally was fueled by a landmark ruling from the United States Supreme Court, which found that former President Donald Trump overstepped his legal authority when implementing broad tariffs.
Legal Blow to Tariffs Sparks Global Rally
The Supreme Court delivered a 6-3 decision, determining that the use of the International Emergency Economic Powers Act (IEEPA) for imposing tariffs was an overreach of executive power. The IEEPA is legislation designed for genuine national emergencies. While the ruling invalidates the legal basis for the tariffs, it left unresolved the critical issue of whether billions of dollars in duties already collected must be refunded. This uncertainty presents a potential future fiscal challenge for the US government.
In immediate response, the Trump administration moved to enact a new, temporary 10% global import tariff set to last for 150 days, beginning the following Tuesday. This action utilized Section 122 of the Trade Act of 1974. Concurrently, the White House initiated new investigations under other trade statutes, processes that are more procedurally defined but could take significantly longer to conclude.
Banking Sector Drives Madrid's Gains
Within the Spanish market, financial institutions were the standout performers. Bankinter and CaixaBank each posted gains of 2.5%. Technology firm Amadeus IT Group also contributed positively, advancing 2.2%. Not all components shared in the uptick, however, with shares of Puig Brands, Rovi, and Naturgy energy company lagging behind the broader index.
The energy sector experienced volatility following an announcement from Repsol. The oil and gas giant revised its 2030 renewable energy capacity target downward to "more than 10" gigawatts, a reduction from its previous goal of 20 gigawatts. This strategic adjustment was disclosed alongside the company's 2025 financial results. Chief Executive Josu Jon Imaz stated the company would "modulate medium-term goals" while maintaining its longer-term objectives.
European Markets Hit Records Amid Cautious Optimism
The positive sentiment extended across the continent, propelling the pan-European STOXX 600 index to a record closing high with a gain of 0.8%. Investors welcomed the tariff decision and a concurrent rebound in banking stocks. Analysts noted a mixed outlook; Chris Beauchamp of IG warned the ruling contained "good elements" but would also "increase this legendary uncertainty" that financial markets typically fear.
The unresolved question of tariff refunds remains a significant overhang. Economists from the Penn-Wharton Budget Model estimated that more than $175 billion in duties collected under the IEEPA could be subject to potential reimbursement. A large-scale fiscal hit from such refunds could subsequently impact US borrowing requirements and government bond yields.
Market Braces for Policy Confusion and Data
Traders are navigating a landscape of relief from immediate trade pressures juxtaposed with fresh legal and policy battles. Rick Meckler, a partner at Cherry Lane Investments, commented, "The confusion ... is probably going to keep this market going back and forth."
Attention now turns to a heavier data calendar for Spain later in the week. Key releases include January producer price figures on Wednesday, February 25th, and a preliminary reading of February inflation on Friday, February 27th. The inflation report will provide both a core reading, which excludes volatile food and energy prices, and a harmonized index used for comparisons across the European Union.
ECB in Focus Alongside Domestic Catalysts
These Spanish economic indicators will be released alongside a notable schedule for the European Central Bank. The ECB's Governing Council will hold a non-monetary policy meeting on February 25th, followed by the publication of its Consumer Expectations Survey on February 27th. For Madrid's market, the Friday inflation print stands as the next major catalyst that will likely determine whether the IBEX 35 can sustain its position above the 18,000-point threshold through the end of the month.
The IBEX 35, which is heavily weighted toward financial and multinational corporations, is widely regarded as the primary real-time indicator of market risk and sentiment in Spain. The index is listed on BME (Bolsas y Mercados Españoles), the Spanish exchange operator that became part of Switzerland's SIX Group in 2020 and subsequently delisted its own shares.
