IBEX 35 Outlook: Short-term Stock Market Prediction Analysis for 2025

Starting Point: The IBEX 35 Breaks the Mold in Its Recent Trajectory

The Spanish stock index has experienced a significant change in recent weeks. After consolidating around 16,000 points in October, the IBEX 35 has accelerated its recovery, reaching all-time highs above 17,000 points between December 2024 and January 2025. This milestone marks an important turning point in the behavior of the Spanish selectivo.

The sustained advance of the index reflects a shift in investors’ perception of the Spanish economy. Local economic data have improved, the employment environment has strengthened — with a record 20.9 million affiliates — and sentiment towards domestic assets has turned more constructive. However, this strength has not been uniform: the movement has been concentrated in certain sectors.

Key Sectors and Their Specific Dynamics

Banking: Driver of the Rise, but with Future Questions

Financial institutions have led the upward movement of the IBEX 35. Banco Santander, BBVA, and CaixaBank have accumulated notable gains, benefited by an environment of high interest rates that has expanded their margins. Corporate results have exceeded expectations, and the flow of share buybacks has provided additional support.

However, this sector dominance faces structural risks. As the European Central Bank continues with its rate cuts — initiated in mid-2024 — the net interest margins of these entities could compress. Analysts suggest that if the rate reduction cycle accelerates during 2025, the banking sector could lose prominence in short-term stock market forecasts.

Energy and Technology: New Opportunities

Companies like Iberdrola, Endesa, and Naturgy have shown solid performance, supported by a stable regulatory environment and increased electricity consumption. Looking long-term, the energy transition and the growing demand for data infrastructure represent a powerful catalyst. It is estimated that by 2030, energy consumption linked to data centers could reach 3.2% of European electricity supply.

Inditex, for its part, has contributed significantly to the overall index, with gains close to 33% so far this year. Its 15.48% weighting in the IBEX 35 makes it a critical component for the index’s performance.

Technology and Telecommunications in the Background

Amadeus IT Group, Telefónica, and Cellnex have maintained more moderate behaviors, with less momentum than cyclical sectors. This dynamic reflects a temporary preference for exposure to stocks more linked to the economic cycle.

Technical Analysis: Key Levels to Watch in the Short Term

Short-term stock market predictions require identifying operational support and resistance levels. The IBEX 35 has demonstrated strength in its attempt to maintain levels above 16,850 points, after briefly approaching 17,000.

Relevant technical levels:

• Main Resistance: 17,000–17,200 points
• Immediate Support: 16,600–16,700 points
• Upside Extension Target: 17,300 points
• Expected Consolidation Zone: 16,800–16,950 points

Technical indicators like RSI fluctuate near 45–55, suggesting that although there is strength, the market is not in extreme overbought conditions. Bollinger bands show contraction, anticipating possible directional movements soon.

Macroeconomic Factors Shaping the Market

Europe: Between Hope for Recovery and Global Uncertainty

The Bank of Spain has revised its economic forecasts upward, anticipating GDP growth of 1.9% for 2025. This dynamism contrasts with the observed industrial slowdown in Germany and the persistent global risk aversion.

Harmonized inflation in the eurozone has fallen to around 1.9%, providing room for maneuver for central banks. The European Central Bank has adopted a cautious tone, with prospects of gradual rate cuts throughout 2025. On the US side, the Federal Reserve has already begun its cycle of reductions, with expectations of further decreases.

Emerging Risks and Their Potential Impact

The estimated probability of a global recession in 2025 is around 45%, mainly due to weakening of the US labor market and demand slowdown. This uncertainty is a limiting factor for bullish projections of the IBEX 35.

Gold’s behavior reflects this investor concern: with an increase of over 20% in 2024 and projections toward $2,700 per ounce in 2025, the precious metal acts as an indicator of geopolitical tensions and potential volatility.

Long-Term Outlook for the IBEX 35: Opportunities with Nuance

Although the short term presents favorable dynamics, the long-term trajectory requires a balanced assessment of opportunities and structural risks.

The energy sector, particularly companies dedicated to renewable sources like Solaria and Acciona Energía, appears poised to benefit from secular trends. The European energy transition, accelerated by initiatives such as the Draghi report investment plan, offers visibility of sustained demand.

However, the index’s concentration in cyclical sectors — mainly banking and energy — exposes it to volatility during periods of economic slowdown. Historically, the IBEX 35 has shown more pronounced oscillation amplitudes than European peers like the DAX or CAC 40, reflecting this sensitivity to economic cycles.

Historical Evolution: Lessons for the Present

Between June and August 2024, the index experienced a sustained upward trajectory, climbing from 13,950 points to around 15,300. This movement was driven by expectations of economic reactivation and robust corporate results.

The period from September to October showed consolidation, with the IBEX 35 stabilizing between 15,400 and 15,700 points. During this phase, uncertainty over global tariffs and the evolution of the Middle East conflict generated episodes of punctual volatility.

Since late October to the present, the index has accelerated, breaking previous resistances and reaching all-time highs. This last stretch has been characterized by confidence in Spain’s post-electoral political stability and favorable expectations for the financial sector.

Composition and Characteristics of the IBEX 35

The index is composed of 35 highly liquid companies from the Spanish market, weighted by free-float market capitalization. Its calculation is performed in real-time during market hours (9:00 to 17:30), with composition reviews every six months.

Main components by weight:

Inditex leads the weighting with 15.48%, followed by Iberdrola (13.83%), Banco Santander (12.13%), BBVA (9.36%), and CaixaBank (5.15%). These five entities account for over 56% of the index, reflecting a significant level of concentration.

Sector Diversification:

• Financial Services: Banco Santander, BBVA, CaixaBank
• Energy: Iberdrola, Repsol, Endesa, Enagas
• Consumer Goods: Inditex, Grifols, Rovi
• Telecommunications: Telefónica, Cellnex
• Construction and Industry: Ferrovial, ACS
• Transport Services: Aena, IAG
• Technology: Amadeus IT Group, Indra

Valuation Metrics and Relative Attractiveness

The IBEX 35 trades with a PER ratio around 12–13 times earnings, positioning it as cheaper than several European peers. This relative valuation suggests room for appreciation in macroeconomic stabilization scenarios.

The index’s historical profitability shows considerable volatility. Between 2018 and 2024, it has recorded returns ranging from -22.76% (2022) to +11.82% (2018). This pattern underscores the importance of diversification and risk management in portfolios exposed to the selectivo.

Conclusions: Short-Term Stock Market Predictions and Scenarios

For the immediate period (January to March 2025), short-term stock market forecasts point to an IBEX 35 in a consolidation range between 16,600 and 17,200 points. In the absence of negative macroeconomic surprises, the index could maintain its bullish bias, although with more moderate movements than in recent weeks.

Positive catalysts include expected corporate results, domestic political stability, and European stimulus expectations. Risks stem from geopolitical tensions, accelerated rate cuts affecting banking margins, and weakening global demand.

Investors’ strategy should balance exposure to traditional cyclical sectors with allocations toward renewables and technology, taking advantage of the opportunity presented by the IBEX 35 at its historical highs, but with caution regarding potential volatility characteristic of the Spanish market.