Spanish markets were also reacting cautiously to warnings from U.S. President Donald Trump, who on Tuesday threatened to cut off all trade with Spain after La Moncloa refused to allow the U.S. military to use bases on Spanish territory for missions related to strikes against Iran.
"I have the right to stop any business involving Spain. Embargoes: I can do whatever I want with them, and we might do that with Spain," Trump said.
German Chancellor Friedrich Merz, who was at the White House when Trump made his threats to Madrid, told the press he had informed the U.S. president that Spain is part of the EU and that any trade agreement must include it.
Spanish Prime Minister Pedro Sánchez is expected to respond to Trump’s comments during the morning.
"Pay close attention to whether the threat of a trade embargo against Spain materializes in any way. (...) We remind that the U.S. is currently the main source of imported LNG, as well as the most important market for our exports outside Europe," analysts at Renta 4 said in a note to clients.
On the macroeconomic front, investors will also be watching PMI data from Spain, France, Germany, the United Kingdom, the eurozone, and the United States, to be released throughout the day, as well as unemployment figures from the European monetary bloc.
"Today the market will remain cool, but without yesterday's declines. Obviously, the focus remains on the Middle East conflict," analysts at Bankinter said on their Telegram channel.
"In recent hours, the U.S. and France have announced they will offer military support to maritime transport passing through the Strait of Hormuz. Although the feasibility/capacity to carry this out is unknown, it could provide some stability to the market today," they added.
The Spanish benchmark closed Tuesday’s session with a loss of 4.6%, the largest since April 2025, and has dropped more than 7% since the start of U.S. and Israeli operations in Iran.
At 0804 GMT, Spain's IBEX 35 stock index was down 35.10 points, or 0.21%, to 17,027.30 points, while the FTSE Eurofirst 300 index of leading European stocks was up 0.44%.
In the banking sector, Santander lost 0.47%, BBVA gained 0.39%, Caixabank fell 0.56%, Sabadell dropped 0.46%, Bankinter slipped 0.71%, and Unicaja Banco lost 0.64%.
Among the major non-financial stocks, Telefónica fell 0.08%, Inditex dropped 0.62%, Iberdrola slipped 0.05%, Cellnex fell 0.43%, and oil company Repsol lost 1.45%.
(Reporting by Benjamín Mejías Valencia; editing by Jesús Calero)
