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Standard Chartered’s (Stanchart) August 2025 outlook provides a comprehensive analysis of global markets, highlighting both short-term risks and long-term opportunities.
With equity markets poised for potential volatility amid uncertainties in US trade policy, investors are encouraged to adopt a strategic approach to navigate near-term challenges while positioning themselves for future growth.
Below is an outline summarising the key insights and recommendations from Stanchart’s report.
Investment Strategy
Short-Term Consolidation: Near-term volatility in equity markets is anticipated. This is due to investor positioning, seasonal factors, and uncertainty surrounding U.S. trade policies. Investors should view equity pullbacks as opportunities to add to their positions, supported by bullish long-term quantitative models.
USD Rebound: A temporary rebound in the USD is expected. This is driven by one-sided positioning, creating opportunities to invest in assets that benefit from a weak USD, such as diversified equities and emerging market local bonds.
Bonds: Maintain a bond maturity profile of 5-7 years to manage volatility. Avoid long-duration bonds due to expected temporary fluctuations in yield. Additionally, gold remains an attractive holding as a hedge against inflation and USD weakness.
Key Calendar Events
- 1 August 2025: US & EU PMI, Non-farm Payrolls, Tariff decision.
- 11 & 18 September 2025: ECB and Fed policy meetings.
- 12 August 2025: China-specific tariff deadline.
- November–December 2025: US off-year elections, further Fed/ECB decisions.
Equity Markets
Equity Index Forecasts (12-Month Targets
| Index | Forecast |
|---|---|
| S&P 500 | 6,700 |
| Nasdaq 100 | 24,700 |
| Euro Stoxx 50 | 5,640 |
| FTSE 100 | 9,500 |
| Hang Seng | 28,000 |
| Nifty 50 | 26,800 |
| Nikkei 225 | 44,000 |
Global Equities: Non-US equities have performed well, but risks remain for the US market. These risks stem from uncertainties in trade policy and positioning at resistance levels. Short-term volatility is expected before the August 2025 tariff deadlines, driven by concerns over US trade policy.
US Equity Rally Risks: The “Trump put” has been a key driver of the equity rally. There are expectations that hawkish trade stances may ease to avoid market losses. The sustainability of this rally will depend on US fundamentals and the outcomes of trade policy.
Inflation Expectations: Inflation remains subdued, which supports long-term equity growth. However, rising tariffs could reintroduce inflationary pressures in the economy.
Currency Outlook
| Currency Pair | 3M Forecast | 12M Forecast |
|---|---|---|
| USD Index (DXY) | 99.5 | 96.0 |
| EUR/USD | 1.15 | 1.17 |
| GBP/USD | 1.31 | 1.37 |
| USD/JPY | 150 | 140 |
| USD/SGD | 1.30 | 1.34 |
USD: A temporary rebound is expected, but long-term weakness will follow due to fiscal issues and trade policy.
EUR/USD: The forecast is for the EUR/USD to rise from 1.15 to 1.17 over the next 12 months. This increase is supported by narrowing yield differentials.
GBP/USD: The GBP/USD is expected to increase from 1.31 to 1.37, driven by improved growth prospects in the UK.
USD/JPY: A temporary rise towards 150 is anticipated, followed by a decline to 140 as the Bank of Japan hikes rates.
USD/SGD: The USD/SGD is likely to hover around 1.30 in the short term.
Gold and Oil
Gold: Gold is expected to remain rangebound around USD 3,400/oz. There is upside potential if trade tensions escalate. The precious metal remains an attractive hedge against inflation and USD weakness, although the near-term outlook is rangebound.
Oil (WTI): Oil prices are anticipated to trade near USD 65/bbl. This reflects oversupply in the market, despite ongoing geopolitical risks.
Sector Views:
US
Favoured sectors include Financials, Technology, and Communications. These sectors are supported by banking deregulation and strong growth in technology.
Europe
Preferred sectors in Europe are Financials, Technology, Communications, and Industrials. Increased defense and infrastructure spending is driving growth in the Industrials sector.
Asia
Attractive sectors in Asia include Technology, Communication Services, and Consumer Discretionary. Specific opportunities can be found in the Hang Seng Technology Index and Korea’s large-cap equities, bolstered by government support for technology.
Bond Outlook
Short-Duration Bonds: Focus on bonds with 5-7 year maturities. This strategy helps lock in yields and reduce volatility.
10-Year US Government Bond Yields: These yields are expected to settle between 4.00% and 4.25% over the next 6-12 months.
Opportunistic Ideas
In the equities market, it is advisable to add to US technology stocks during pullbacks, particularly after a 5% decline from recent highs.
For bonds, consider short-duration US high-yield bonds to achieve attractive yields with lower volatility, and invest in TIPS (Treasury Inflation-Protected Securities) due to potential upside risks in inflation.
Additionally, increasing exposure to EM local currency bonds is recommended, as these bonds benefit from a weak USD.
Key Risks
US trade policy may introduce potential tariffs that could trigger volatility, particularly if key deals are not reached by the August deadline.
This scenario could lead to inflation and delay Federal Reserve rate cuts. In terms of investor positioning, stretched equity positioning and the growing divergence between the VIX and US policy uncertainty indicate near-term consolidation risks.
Regarding global growth, the resilience of the US economy is supported by lower inflation and robust corporate earnings; however, shifts in fiscal policy or tariffs could affect growth projections.
Economic and Policy Outlook
The "One Big Beautiful Bill" in the US could add approximately $3.4 trillion (around SGD 4.386 trillion) to the primary deficit by 2034, with short-term tax cuts supporting consumption and domestic investment.
However, higher borrowing may drive long-term interest rates up. A slowing US job market and cooling global industrial production could lead to a soft landing, with the Federal Reserve expected to cut rates in September to stimulate growth.
In China, stimulus measures are likely to maintain moderate growth, but trade tensions with the US and high tariffs on Chinese exports may negatively impact performance.
Meanwhile, increased infrastructure and defense spending in Germany are expected to offset potential negative effects from European Central Bank rate cuts.
Summary of Asset Allocations
| Asset Class | Positioning | Insights |
|---|---|---|
| Global Equities | Overweight, with a preference for Asia ex-Japan equities due to favorable valuations and growth prospects. | Asia ex-Japan equities present attractive opportunities amidst global market fluctuations. |
| Bonds | Underweight Developed Market Investment Grade Corporate Bonds, focusing on EM local currency bonds and short-duration bonds for better risk-adjusted returns. | Shifting focus to emerging market bonds can enhance returns while managing risk effectively. |
| Gold | Core holding, providing a hedge against inflation and uncertain economic conditions. | Gold serves as a reliable asset during times of economic uncertainty, protecting purchasing power. |
| US & Emerging Market Equities | US equities remain a core holding, though with a cautious near-term outlook, while Asia ex-Japan equities are preferred for strong growth potential. | Maintaining US equities while favoring Asia ex-Japan reflects a balanced approach to growth and risk. |
Conclusion:
Stanchart’s August 2025 outlook underscores the importance of balancing caution with opportunity in an uncertain market environment.
While short-term risks such as US trade policy and stretched equity positioning warrant attention, long-term opportunities in global equities, EM bonds, and gold remain compelling.
By adopting a disciplined investment strategy and leveraging opportunistic ideas, investors can position themselves for the next market surge.
Key Takeaways:
- Equities: Use pullbacks as buying opportunities; favor Asia ex-Japan equities.
- Bonds: Focus on short-duration and EM local currency bonds; avoid long-duration bonds.
- Currency: USD rebound is temporary; long-term weakness supports EM assets.
- Gold: Core holding for hedging inflation and USD risks.
- Risks: Monitor US trade policy, investor positioning, and global growth trends.
Reference: Standard Chartered Bank Singapore Global Market Outlook 2025 Report.
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