The defensive bias was further amplified by the looming Easter break, with the Spanish stock market scheduled to remain closed on Friday and Monday.
Nerves surrounding Iran intensified, triggering equity sell-offs, a spike in oil prices well above 100 dollars per barrel, and a stronger dollar, after the U.S. president dashed hopes for clarity on the conflict's timeline.
In his address, the president vowed that the United States would hit Iran "extremely hard" within weeks, while maintaining that key military objectives were nearing completion and that the war was approaching its end. He also asserted that he would take Iran back to the "Stone Age" if it did not accept a negotiated settlement, yet failed to set a withdrawal timetable, leaving investors wary of the campaign's ultimate scope and duration.
"This message sows doubt as to whether Trump is willing to inflict further damage on energy facilities that would be rendered useless for some time. Although he stated he is open to negotiations, it became clear that his preference remains to continue the offensive," Renta 4 noted in its morning report.
Trump also reiterated his demand that countries dependent on Persian Gulf oil take the initiative and bear the cost of reopening the maritime route over which Iran maintains a level of control capable of strangling traffic—a scenario some observers have described as the worst global energy shock in history.
The prospect of an end to the month-long war had boosted global equities and pulled the dollar back from recent highs over the previous two sessions, following a brutal March in which soaring crude prices battered risk assets.
However, following the speech, investors returned to selling off nearly all assets except the dollar, while oil climbed. Trump's comments also revived fears of stagflation—the combination of high inflation and weak growth that rattled markets in March.
With most major Western markets closed on Friday, investors appeared to be significantly de-risking to avoid exposure to any potential escalation over the weekend.
On the macroeconomic front, the week's most critical data point—the U.S. monthly jobs report—will be released on Friday while European markets are closed. According to a Reuters poll, analysts expect net job creation to rise by 60,000, following a decline of 92,000 the previous month.
At 0702 GMT, Spain's benchmark IBEX 35 was down 279.70 points, or 1.59%, at 17,300.70, after a 3.1% gain on Wednesday. Meanwhile, the pan-European FTSE Eurofirst 300 index retreated by 1.17%.
In the banking sector, Santander lost 2.94%, BBVA fell 2.33%, Caixabank shed 1.57%, Sabadell dropped 2.14%, Bankinter declined 1.41%, and Unicaja Banco lost 2.14%.
Among large-cap non-financial stocks, Telefónica gained 0.34%, Inditex shed 2.73%, Iberdrola rose 0.10%, Cellnex fell 0.61%, and Repsol climbed 3.04%, bolstered by crude prices.
(Reporting by Tomás Cobos; editing by Benjamín Mejías Valencia)
