Only Indra and Solaria gained at the opening as the Ibex 35 fell 0.9% on 1 October. Investors weighed Trump's warning on Iran, oil near 100 dollars per barrel and the risk to shipments through the Strait of Hormuz.
At the opening of Thursday's session on 1 October, only Indra and Solaria were in positive territory. The Ibex 35 fell 0.9% and dropped below 19.300 points to 19.251. Traders focused on the risk that new developments in the Middle East could push oil prices higher. Europa Press linked the weak European opening to energy costs and a wider geopolitical risk premium.
Donald Trump said the United States was nearing a decision on Iran. His administration could reach an agreement to end the war or choose direct escalation. He also said the conflict around the Strait of Hormuz would end very soon, without saying which path Washington would take.
Two tracks are open.
Al Jazeera's live coverage described the comments as a sign that diplomatic and military moves were developing at the same time.
Iranian authorities said on Wednesday that they had received an official US response, delivered through intermediaries, to Tehran’s proposal to end the conflict and return openly to negotiations.
The uncertainty quickly reached the energy market, even though crude prices moved only slightly at first. Traders remain alert to any disruption in the Strait of Hormuz because the route carries a significant share of global oil shipments. A change in its status could add a risk premium to prices.
Brent crude rose 0.1% at the start of European trading to 98.2 dollars per barrel. West Texas Intermediate, the US benchmark, was unchanged at 90.4 dollars. CNBC reported that Brent was trading between 97 and 98 dollars and WTI around 89 to 90 dollars on 1 October.
Markets were weighing the chance of restored Middle East shipments against continuing geopolitical tension. Oil moved little. Equities took the harder hit.
Indra advanced 1.1% within the Ibex 35. Solaria gained 1%. The other leading risers were absent from the opening picture, so selling pressure fell on most of the index. Sabadell recorded the steepest decline at 1.7%. Cellnex fell 1.42%, Unicaja dropped 1.41% and Caixabank lost 1.35%.
Brent had risen above 108 dollars per barrel late in September before retreating as reports emerged of a possible phased agreement and an Iranian proposal to reopen the Strait of Hormuz in exchange for concessions from the United States. The earlier volatility helps explain why traders remain highly sensitive to every diplomatic signal.
Banks took much of the immediate damage. Sabadell, Unicaja and Caixabank all fell as other major European markets opened lower. The pressure was not limited to one Spanish company.
Investors were watching the talks and the risk of military escalation at the same time. That kept attention on the possible effect of higher energy costs on growth, inflation and financing conditions.
London dropped 1.1% at 9.09am. Paris and Milan lost 0.7%, while Frankfurt fell 0.6%. The figures showed a broad move away from risk across Europe. Any disruption linked to the Strait of Hormuz could affect the oil market.
Contacts through intermediaries offered a possible route to de-escalation. Trump's public warnings pointed the other way.
The shift from the company-level labour story in the Ford Almussafes agreement shows how quickly the news agenda changed. The focus is now on geopolitical risk. It is visible in the index, bank shares and crude prices.
Currency and bond markets also moved. The euro weakened against the dollar to 1.1316 dollars. Spain's ten-year bond yield rose to 4.163%. The weaker currency and higher borrowing costs showed that the shock had spread beyond equities.
Spain's market opened with more than a routine decline. The Ibex fell sharply, oil stayed close to 100 dollars per barrel and borrowing costs rose at the same time. Trump's unresolved choice over Iran remains the main trigger in this report.
The Iranian response and contacts through intermediaries leave investors between two possibilities. Talks could lead to de-escalation. Further confrontation remains a risk. With only two Ibex companies in positive territory, the session began with risk dominating returns.
