The Ibex 35 fell 1.17% to 19,216.52 points in intraday trading as oil moved above $100 a barrel and government debt yields rose. The sell-off spread across Europe, while losses in the United States were more moderate. Spanish banks became the clearest test of whether higher borrowing costs are beginning to weaken credit demand.
The banking figures do not yet show a broad collapse in lending. The latest European data available, from July, recorded a 16.4% year-on-year increase in new housing credit. Consumer lending rose 3%, while lending to companies increased 8%. Spain's 10-year bond yield rose to 4.144%, from 4.07% the previous day, and the spread over German bonds widened to 64.6 basis points, information from market data reported on 7 October.
The picture in Spain was uneven. New housing and consumer credit deteriorated, but the outstanding balance grew because repayments were lower. Credit to companies increased 5% and remains the more impressive segment for the banking sector. Higher debt yields could slow demand later, yet the figures still point to a healthy market.
Banks earn interest income from the rates charged on loans and the amount of credit they grant. Rates are moving in their favour, and lending volumes have held up so far. That mix explains why investors are putting pressure on the sector even though its day-to-day operations have not suffered a clear break.
Other Ibex 35 stocks showed a sharper divide. Rovi rose more than 2%. Repsol also benefited from stronger crude prices and the release of third-quarter operating data. Its refining margin more than doubled from 2T2026 despite a lower average crude price. Efficiency improved, and the company used more of its distillation and conversion capacity. A filing to Spain's CNMV put the refining-margin benchmark in Spain at $36.2 per barrel in the third quarter. That was up 158.6% from $14 in the second quarter and 311% from $8.8 a year earlier. Repsol also reported a 4.2% increase in production, to 574,000 barrels of oil equivalent per day. The $36.2 benchmark was the company's highest since the second quarter of 2022, when it reached $23.3 amid the energy crisis that followed the start of the war in Ukraine, information from Repsol's filing to the CNMV. Gains were uneven across the portfolio: the chemical business margin fell 32% quarter on quarter to €387 per tonne, though it remained above the €258 recorded a year earlier.
ArcelorMittal fell more than 3%. Its European production leaves it highly exposed to energy costs, making expensive oil and power a direct problem for the company. Solaria also dropped as investors cut risk across the market.
The pressure reached well beyond Madrid. Italy's FTSE MIB fell more than 2%, with banks leading the decline. France's CAC and Germany's DAX also weakened. A 10-year French bond yield rose 12 basis points, adding to fears that higher financing costs could hit consumption and worsen public accounts. Spain's market exposure can also be viewed alongside the corporate holdings described in an earlier portfolio analysis. Market coverage linked the European sell-off to inflation risks and expectations of further monetary tightening, with oil only one factor.
Oil remains the most visible outside trigger. On 7 October, Brent rose above $100 a barrel as attacks targeted shipping in the Strait of Hormuz. Middle Eastern crude exports have recovered to close to 80% of their pre-war levels, but the Strait remains under pressure. The barrel price still carries a large geopolitical premium.
Government bond yields rose at the same time. The dollar strengthened, and traders began pricing in further rate increases by major central banks. Expectations for Bank of England rates by the end of the following year rose by more than 100 basis points. The euro weakened against the dollar amid concern over France, although the high level of United States debt limits how far the exchange-rate deterioration can go.
This session does not support the view that Spanish bank credit caused the market shock. Costly energy and rising public financing costs, along with expectations of tighter monetary policy, offer a stronger explanation. Banks remain relatively resilient because corporate lending and the overall balance are still holding up, but investors are watching weaker future demand as the sector's basic vulnerability. Repsol gained from the oil surge, while the wider Ibex 35 took the hit from a more expensive financial environment.
