Morale didn't play a (major) role in that battle. You just said, that Portugal caught you unloading troops, that explains it all. If they got you with their 17 heavies, that is a "close to perfect stack" (at least far better than your 32 heavies + different ships) If you later moved in your heavies (mind it, in a not so well-composed stack) your transports were already doing the fighting, so it's no wonder you lose that engagement badly. Or am i mistaken?