The Spanish stock market index Ibex-35 lost almost 1% on Tuesday, dragged down by the banking sector, and fell below the psychological barrier of 10,000 points, in a market unsettled by events in the Middle East and by fears that hopes of rate cuts could be frustrated.

Since the end of November, the equity markets have been swinging back and forth without a clear direction, due to the comings and goings of speculation about interest rate cuts and the growing concern about the situation in the Middle East, where fears are growing that the war between Israel and Gaza will spill over its borders.

"The situation has not changed since the beginning of 2024, with the Spanish stock market trading in a sideways range, waiting for a breakout in one of the two zones, so we will keep an eye on the aforementioned support today," said analysts at Renta 4.

After the meteoric rise in November and part of December, driven by hopes of cuts in the cost of borrowing, financial markets have shown doubts about the horizon of central banks this year, especially after comments from leaders of the Federal Reserve and the European Central Bank.

On Monday, the ECB's Joachim Nagel said it was "too early" to talk about rate cuts, with inflation still "too high," while Bank of France Governor François Villeroy said that while the next monetary move is likely to be a rate cut, the question remains as to when it will happen.

On the other side of the Atlantic, investors will be scrutinizing comments from Christopher Waller, an influential member of the Federal Reserve, on Tuesday.

Elsewhere, they will also pay attention to the German ZEW economic confidence index (Tuesday), Chinese economic data (Wednesday), Eurozone inflation figures and U.S. retail sales (Wednesday), among other macroeconomic indicators, as well as the trickle of quarterly results from U.S. companies with the release of reports from Morgan Stanley and Goldman Sachs on Tuesday.

At 08:05 GMT on Tuesday, Spain's selective Ibex-35 stock market index was down 93.70 points, or 0.93%, to 9,985.60 points, while the FTSE Eurofirst 300 index of large European stocks was down 0.79%.

In the banking sector, Santander lost 0.86%, BBVA fell 0.92%, Caixabank gave up 0.81%, Sabadell fell 2.21%, Bankinter dropped 0.95%, and Unicaja Banco lost 0.88%.

Among the large non-financial stocks, Telefónica fell 0.58%, Inditex dropped 1.44%, Iberdrola dropped 0.56%, Cellnex fell 0.67%, and the oil company Repsol lost 0.83%.

(Information by Tomás Cobos; edited by Javi West Larrañaga)