Key Takeaways
- Spain’s Prime Minister Pedro Sanchez has called a snap general election for November 29, 2026, following a major legislative defeat regarding housing reforms.
- The Spanish Services PMI rose to 58.3 in September, matching a 3.5-year high and signaling robust economic expansion despite rising operating costs.
- Yemeni government forces launched a major offensive against Houthi positions near the strategic Bab el-Mandeb strait, aiming to recapture territory following recent Houthi gains.
- Input price inflation in Spain hit a six-month high, driven by surging energy and labor costs, which may pressure future service sector margins.
Political Upheaval in Madrid
Spanish Prime Minister Pedro Sanchez announced on Monday that the country will head to the polls for an early general election on November 29, 2026. The decision comes just days after the minority government’s emergency housing legislation was defeated in Parliament. The proposed laws, which aimed to increase tenant protections and cap evictions, were voted down 178 to 172 by a coalition of right-wing and regional parties, including the People’s Party (PP) and Vox.
The legislative failure coincided with massive public unrest, including a protest in Madrid that drew over 70,000 people angry over housing affordability. Sanchez characterized the election as a choice between progressive advancement and a right-wing reversal of social freedoms. Current opinion polls suggest a challenging path for the Socialists, with the conservative PP currently leading.
Spanish Economy Shows Resilience
Despite the political volatility, Spain’s private sector continues to demonstrate significant momentum. The S&P Global Services PMI increased to 58.3 in September from 57.8 in August, outperforming market expectations of 57.0. This reading matches the 3.5-year high reached in July and marks the best quarterly average for the sector in five years.
However, the report highlighted growing "stagflationary" pressures. Input cost inflation surged to a six-month high due to rising energy, fuel, and wage demands. While firms raised their own output prices at the fastest rate since April to protect margins, business sentiment softened to a four-month low as geopolitical uncertainty began to weigh on long-term outlooks.
Escalation Near Bab el-Mandeb
In the Middle East, the internationally recognized government of Yemen has initiated a large-scale military campaign to retake territory from Iran-backed Houthi forces. Military sources confirmed heavy fighting in the Dhubab district, a strategic area overlooking the Bab el-Mandeb strait. This waterway is a critical chokepoint for global maritime trade, linking the Red Sea to the Gulf of Aden.
The offensive, supported by Saudi Arabia, follows a series of Houthi advances last month that saw the group seize control of key coastal stretches. In retaliation for the government's push, Houthi spokesmen claimed to have launched ballistic missiles and drones targeting Saudi Aramco facilities in Riyadh. The intensification of the conflict poses a renewed threat to international shipping lanes and regional energy infrastructure.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.