Spain’s main stock index reached a record closing level not seen since 2007, driven by a rally in the banking sector.

The Ibex 35 climbed as much as 0.7% on Monday to 15,978 points, surpassing its pre-global financial crisis peak. Spanish equities have surged 38% so far in 2025, outperforming regional peers as investors bet that the upward momentum still has room to continue.

Shares of companies such as Mapfre SA, Banco Santander SA, and BBVA SA led gains, benefiting from their exposure to Argentina. President Javier Milei’s party secured a midterm victory on Sunday, raising expectations for further economic reforms and potential support from the US.

European stocks have reached multiple post-pandemic highs, with the Euro Stoxx 50 and Germany’s DAX trading close to record levels, though Spain had previously fallen short of reclaiming its peak.

With Madrid’s recent gains, Italy’s benchmark now stands as the only major European index yet to recover its pre-global financial crisis highs.

The rebound coincides with Spain’s economic expansion, low unemployment, and easing inflation. The country has also received credit-rating upgrades from S&P Global Ratings, Moody’s, and Fitch, Bloomberg reports.

Banks have been the primary drivers of Spain’s strong performance, making up roughly a third of the Ibex 35, as the country’s economy is projected to grow at twice the pace of the European Union in 2025.

Investors are also viewing Spain as a way to reduce exposure to the US, with the benchmark deriving about 32% of its revenue domestically, 55% from Europe overall, and around 20% from Latin America.

Banco Santander and BBVA have surged over 80% this year, making them the two largest EU-based banks by market capitalisation. Attracting investors with strong dividends and share buybacks, they have maintained momentum throughout the European Central Bank’s rate-cutting cycle.

Meanwhile, Indra Sistemas SA has been the Ibex 35’s top-performing stock in 2025, soaring 183% amid a broader rally in defence-sector companies.