IBEX 35 Plunges After Trump’s Criticism, Middle East Tensions

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Spain’s IBEX 35 index dropped over 2.5% to 19,095 points on Wednesday after US President Donald Trump criticized Spain as a "terrible partner in NATO," claiming it "doesn’t pay" or participate. He further called the country a "wasted cause" and "hopeless." In response, Spain’s government, in a statement to El País, said it aims to maintain a strong relationship with the US and is receiving Trump’s remarks "calmly." The sell-off was also driven by escalating Middle East tensions, which pushed oil prices higher, fueled inflation concerns, and increased bets on European Central Bank rate hikes, darkening the Eurozone’s economic outlook. Brent crude hit two-week highs following renewed US-Iran strikes, with Trump declaring the Iran ceasefire "over." Traders now price in over 30 basis points of additional ECB tightening this year, signaling at least one potential rate hike, possibly as early as September.
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