Investors were focused on the U.S. CPI release (1330 GMT) and its implications for the Federal Reserve, while continuing to assess political pressure on the central bank and various international flashpoints.
The market is still digesting the criminal investigation launched by President Donald Trump's administration against Jerome Powell, interpreted as an escalation in the campaign to force faster rate cuts, a move that has drawn criticism from former Fed officials and figures within the Republican Party itself.
"There remains a certain unease in the market regarding Trump's intensifying pressure on the Fed (lawsuits against Powell), as this could lead to rates being lower than technically appropriate throughout 2026, which could ultimately result in a resurgence of inflation down the line," Bankinter analysts said on their Telegram channel.
The main reference point of the day is the U.S. CPI, which, according to a Reuters poll, is expected to show an acceleration in inflation in December as some distortions stemming from the government shutdown that had artificially lowered the November rate dissipate.
The data could reinforce expectations that the Fed will leave rates unchanged this month, although Bankinter notes that the market is unlikely to interpret this negatively.
"Firstly, because that level is already quite good in itself. And secondly, because the figure will not be considered entirely reliable due to the data collection distortions following the partial U.S. government shutdown."
The other major reference point this week is the possible U.S. Supreme Court ruling on the legality of Trump's tariffs, expected Wednesday, with markets also closely watching several international policy fronts.
In this regard, attention remains on Greenland, as Trump continues to insist that Washington should control the Arctic territory to prevent advances by Russia or China. Against this backdrop, a bipartisan group of lawmakers will visit Denmark, and measures are being considered in Congress to prevent a potential takeover.
Additionally, vigilance continues over Iran, where the crackdown on protests has left nearly 600 dead. Tehran said Monday that it is keeping communication channels open with the United States, while President Donald Trump is considering possible military action in response to the lethal violence against demonstrators.
With this backdrop, as of 0805 GMT on Tuesday, Spain's IBEX 35 stock index was up 53.00 points, or 0.30%, at 17,726.80 points, the highest level in its history, while the FTSE Eurofirst 300 index of leading European shares rose 0.12%.
In the banking sector, Santander climbed 1.04% after receiving an upgrade from Kepler Cheuvreux, BBVA gained 0.14%, Caixabank advanced 0.28%, Sabadell was up 0.21%, Bankinter rose 1.14%, and Unicaja Banco increased 0.80%.
Among major non-financial stocks, Telefónica fell 0.76%, Inditex rose 0.80%, Iberdrola gained 0.11%, Cellnex dropped 1.16%, and oil company Repsol was up 0.46%.
(Reporting by Tomás Cobos; editing by María Bayarri Cárdenas)
