EWP Overview

GDP Growth: Spain's GDP grew by 2.8% year-over-year and 0.6% quarter-over-quarter in the third quarter of 2025.

Market Insights: ETFs like EWP and EUFN are discussed, with EUFN showing potential despite lighter tailwinds for European banks.

Economic Indicators: Spain's service PMI experienced a decline in November, indicating potential challenges in the service sector.

Inflation Trends: Inflation in Spain is projected to decrease to 3% in November, suggesting a potential easing of price pressures.

U.S. Market Performance: The S&P 500 has gained 15% year-to-date, primarily driven by large-cap technology stocks, but U.S. equities have underperformed compared to several international markets.

International Market Gains: Countries like South Korea and Peru have seen equity returns exceeding 80%, with strong performances in Southern Europe and resource-rich economies due to rising commodity prices and improved growth expectations.

Investment Outlook: J.P. Morgan Asset Management suggests that investors should diversify away from U.S. tech stocks, as future global equity performance may favor markets with strong earnings growth and attractive valuations.

Regional Diversification Benefits: The report emphasizes that diversifying investments can mitigate risk and enhance returns, particularly if enthusiasm for U.S. artificial intelligence themes diminishes.

Investment Performance: In 2025, international stocks significantly outperformed U.S. equities, with South Korea's market rising 65% and Spain's by 40%, while the S&P 500 increased by about 15%.

Top International ETFs: Recommended ETFs for gaining exposure to international markets include the Franklin FTSE South Korea ETF, iShares MSCI Spain ETF, Franklin FTSE Latin America ETF, Vanguard FTSE Europe ETF, and iShares MSCI Canada Index Fund ETF, each with unique advantages and low expense ratios.

Market Drivers: The strong performance of international markets is attributed to factors such as favorable domestic policies, a decline in the U.S. dollar, and increased spending in Europe, particularly in Spain's banking sector and South Korea's tech industry.

Future Outlook: The trend of international stocks outperforming U.S. equities is expected to continue into 2026, making diversification through international ETFs a strategic investment approach.

Manufacturing PMI Decline: Spain's Manufacturing PMI fell to 51.50 in November from 52.10 in October 2025, indicating a decrease that was lower than market expectations.

Inflation Trends: Spain's inflation rate is projected to ease to 3% in November, suggesting a potential improvement in economic conditions.

ETF Insights: The performance of European bank ETFs (EUFN) is noted to be weaker due to lighter tailwinds, while the EWP ETF faces challenges from NATO pressures, inflation, and public discontent.

Market Outlook: The commentary suggests caution regarding investments in Spain, highlighting potential economic turbulence following a period of growth.

Inflation Rate: Spain's annual inflation rate decreased to 3% in November 2025, slightly above market expectations of 2.9%, with a monthly CPI increase of 0.20%.

Core Consumer Prices: Core consumer prices rose by 2.60% in November compared to the same month the previous year.

Retail Sales: Retail sales in Spain grew by 3.8% in October year-over-year, a decline from the 4.2% increase observed in the previous month.

Service Sector Growth: Spain's service sector reached a 10-month high in October, indicating expansion in that area of the economy.

Trade Deficit: Spain recorded a trade deficit of €5.98 billion in August 2025, the highest since January, up from €4.76 billion in the same month last year.

Export and Import Trends: Exports decreased by 9.3% year-over-year to €24.4 billion, while imports fell by 4% to €30.3 billion, marking a significant decline in trade activity.

Market Reactions: Concerns regarding Spain's economic outlook are reflected in ETF sentiments, with some analysts advising caution due to NATO pressures, inflation, and public discontent.

Sector Growth: Despite the trade deficit, Spain's services sector experienced accelerated growth in September, indicating some resilience in the economy.