Trump Threatens Sánchez Over Defense Spending ShortfallTrump Warns of Trade Reprisals Against Spain for Refusing NATO's 5% Target: Direct Impact on the IBEX 35
By Ion Jauregui – Analyst at ActivTrades
The recent NATO summit in The Hague concluded with an ambitious proposal: raise defense spending to 5% of GDP by 2035. However, Spain distanced itself from the consensus, triggering a diplomatic storm led by former U.S. President Donald Trump. His remarks have already begun rippling through financial markets — especially the IBEX 35.
Sánchez Rejects 5% Target, Cites "Realism"
During the summit, Spanish Prime Minister Pedro Sánchez succeeded in including a clause allowing Spain to stick to its current commitment of 2.1% of GDP for military spending. In his address, Sánchez argued that increasing it to 5% would jeopardize essential public services like healthcare and education, warning against “budgetary fetishism” in foreign policy.
"Security isn’t measured solely in percentages. We will defend fiscal sovereignty and the welfare state," Sánchez stated from The Hague.
Trump Launches Verbal Offensive Against Spain
The Spanish leader’s comments were swiftly met with criticism from across the Atlantic. Speaking aboard Air Force One, Donald Trump labeled Spain “a problem for NATO” and warned the country would “pay double” in future trade deals with the U.S. for refusing to meet the new defense spending target.
"Spain is freeloading off its allies. If they won’t pay, they shouldn’t expect our protection," Trump said, hinting at potential tariffs on Spanish products and exclusion from preferential terms in bilateral trade negotiations.
IBEX 35 Reacts: Declines in Export-Sensitive Companies
Technically, the IBEX 35 is in a consolidation phase, with immediate support at 13,698 points and key resistance near recent highs. Indicators like the RSI, now in neutral territory, and a bearish MACD suggest caution, as a breach of support could trigger a deeper correction. While the broader trend remains bullish, the control point lies around 13,300 — an area that previously served as an accumulation zone and breakout level — which the market may revisit before resuming its upward trajectory.
Investor anxiety was evident in Madrid’s trading floor: the IBEX 35 closed Thursday down 0.85%, weighed by internationally exposed firms such as Naturgy, Cellnex, and Grifols, which fell as much as 3.5%. The index also formed a low-volume doji candle — a technical signal that may precede a pullback. In contrast, stocks like Acciona Energía and IAG, either less reliant on the U.S. or more diversified, managed modest gains.
This week, the index has shown signs of fatigue after peaking at annual highs of 14,368 points in late May. It opened today around 13,876. With the RSI at 48% and a bearish MACD, the IBEX remains in consolidation. The 13,300 area continues to be a key control zone, potentially acting as a springboard should sentiment improve.
Geopolitical and Trade Uncertainty: Spain’s New Risk Factor
Trump’s combative tone introduces a fresh layer of uncertainty into an already tense global backdrop of trade frictions and evolving security strategies. His threat of trade reprisals places strategic sectors of the Spanish economy — such as agri-food and industrial exports — in a vulnerable position.
Domestic politics complicate the picture further: internal criticism from the opposition and a minority government reduce Spain’s ability to respond decisively to external pressure.
Short-Term Outlook: Consolidation or Correction?
From a technical standpoint, the IBEX remains in consolidation with key support at 13,750. A break below could deepen the correction, while any easing of geopolitical tensions might pave the way for a retest of annual highs.
Conclusion:
Spain’s refusal to adopt NATO’s 5% defense spending goal has sparked a diplomatic rift with the United States, already reflected in financial markets. Trump’s threats are not merely rhetorical — if they materialize into trade barriers, the economic consequences for Spain could be significant. The IBEX 35, as a barometer of investor sentiment, will remain closely tied to this unfolding story.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.
