The first months of 2025 leave a trail of stock market instability, a result of the presence (and power) of Donald Trump, which worries investors. Amidst the market fluctuations, the messages and warnings from analysts in each episode of tension repeat: uncertainty is very high, yes, and we will have to learn to live with it. With a trade war already underway, tariffs in place, and some significant losses in global indices (even American ones), one may wonder: is there a safe place to invest away from Trump's decisions?
Analysts are clear: no. We are all exposed to the US trade war. "No one is exempt, the Trump effect affects us all," explains Rafael Alonso from the Analysis and Markets Team at Bankinter. However, and continuing with the message of caution for investors, it is always worth looking back and monitoring which indices (and sectors) have performed well during these months, as that could hold the key for the future.
The Old Continent has been doing its homework for a while: with each new interest rate cut executed by the ECB, Europe's inflation approached a more controlled situation. In fact, analysts highlight how 2025 has been the second-best start for the European stock market in the last 25 years.
Thus, the trajectory of the European market is viewed optimistically, recovering from the poor performance compared to other global indices, as recently argued by Abante Asesores. Evidence of this is the Eurostoxx 50's 15.3% growth between February 2024 and 2025, while during the same period, the S&P 500 in the US increased by 20.7%. Although there are no "immense returns," their analysts believe the key lies in the "forgotten assets," and in the neglect of European products compared to more appealing ones.
"A few months ago, there was a feeling that one had to be on the bandwagon of American assets, due to the Trump effect. That is no longer the case, allowing the market to focus on other aspects that were perhaps overlooked," explains José Ramón Iturriaga, manager of the Okavango Delta at Abante Asesores. Focused mainly on Europe, the US, and Asia, this fund includes about 25 Spanish companies. The expert believes that often, the political noise scares investors, leaving the Spanish index far from their radar.
Contrary to the current reality, buoyed by the good performance of the economy and business results of the past year, the Ibex35 presents itself as one of the great promises among European indices.
The country's most representative index closed 2024 with a 20% return. And so far in 2025, it has accumulated a 15.1% growth. Moreover, just in February, when it surpassed the 13,000-point mark (levels not seen since 2007), it appreciated by nearly 8%. This even outperformed the Euro Stoxx 50 (a European benchmark) and its 3.34% growth in the same month. Analysts argue that it has been one of the best performers in Europe, signaling a positive trend for the coming months, as outlined in the recent report from Deutsche Bank SpainThe success of a service economy. In the document, where they share their perspectives for February 2025, the entity explains how, after "extraordinary growth in 2024" and a 3.2% annual increase, "2025 should bring some slowdown in growth, although it would still be significantly higher than the eurozone as a whole." Furthermore, Deutsche Bank argues that "the specialization of the Spanish economic model towards a service economy will allow it to face potential US tariffs in a better position than its European counterparts."
normalization of interest rates," adds the expert. In an environment of interest rates "abnormally low" for an extended period, there were "many inefficiencies in the capital market." "In the case of the stock market, the sectors that performed well were mainly those known as growth sectors, and among them, the European stock market, and specifically the Spanish one, have few," explains Iturriaga. It took the normalization of interest rates to "reasonable levels" for the Spanish stock market to take off.
In Spain, the three fundamental factors align a bit: macroeconomics, microeconomics, and valuations. "This makes the performance of the European stock market better than the American one, and within Europe, the Spanish market stands out," adds Iturriaga. Among the mentioned macroeconomic aspects that accompany the good trajectory of the Spanish stock market, the expert highlights a very low level of private sector debt, a balance of payments that "has also turned around," business results for the last quarter of the previous year, and valuations. "That is the key," explains Iturriaga, adding that "the valuations of the Spanish stock market remain among the most attractive in Europe." Therefore, he concludes, "there are reasons to believe that it will continue to perform well in the coming years."
From Bankinter, Alonso is firm: "In the next two months, the defense and banking sectors will perform well."
Deutsche Bank explains that "the strong weight of the financial sector in the Ibex35, one of our favorite sectors, makes us optimistic for 2025," even contrasting the situation with the neighboring country, France: "In fixed income, the Spanish risk premium has resisted well to the crisis in neighboring France."
exceptionally well." Therefore, Bankinter believes that "the banking sector is a good place to be" because credit demand is rising, and with stable interest rates, "banks will provide returns on capital at levels similar to those of 2024, which were record returns." Among the entity's favorite entities are Santander (which increased its value by 25.3% in February) and CaixaBank (14.2%).
The latter is among the bets of Abante Asesores, highlighting the significant "sustained profitability" of Spanish banks. Regarding CaixaBank, Iturriaga explains that "it is one of the stocks with the highest dividend yield in the Spanish stock market." However, their bets also extend to other sectors, "more linked to the real economy," such as tourism and industrial companies. To justify this choice, the analyst highlights the good performance of the service sector with the "shift in priorities" brought about by the years of the Covid-19 pandemic, and how its significant weight in the Spanish GDP supports the positive evolution of the economy in recent years. Within this sector, some companies that have shone in 2024 and had "very attractive valuations" at the time of writing this article include Meliá and IAG. The latter has also appreciated by 17.33% at the beginning of 2025.
Iturriaga also advocates for the construction sector and "the clear tailwind it has" amid the current housing crisis: "From a macro perspective, this is future growth, pent-up. The economy will continue to grow, and economic cycles in Spain have always been linked to the behavior of the construction sector." Among the most prominent developers are Metrovacesa and Aedas, and among the REITs, he points to Merlin Properties. Additionally, among industrial companies, Acerinox stands out logically.
Recent decisions in Europe to increase spending in the defense sector have boosted this industry. Rheinmetall in Germany and Thales in France have seen their value soar at a dizzying pace. In Spain, its main reference is Indra and its meteoric rise in 2025. "Defense per se allows you to have good structural profitability," concludes Alonso in defending Bankinter's bet on this firm.