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Standard Chartered's June 2025 Outlook: Is the Global Rally Just Getting Started?

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As global markets show signs of resilience, Standard Chartered’s June 2025 outlook paints a cautiously optimistic picture.

The bank sees potential for further gains in equities, particularly in the US and China, while highlighting opportunities in high-quality bonds and gold.

However, risks such as US fiscal deficits, trade policy uncertainty, and currency fluctuations remain on the horizon.

For Singaporean investors, this presents both opportunities and challenges. Here’s a detailed breakdown of the key insights and their implications.

Investors in gold and investors in bonds cannot both be right

Strategic Market Views

  1. Global Equities:
    • Upgraded to Overweight due to easing US trade policy risks, improved market technicals, and strong corporate earnings.
  2. US Equities:
    • Upgraded to a small Overweight as the “Sell America” trade is considered overdone.
  3. China Equities (Asia ex-Japan):
    • Overweight due to policy stimulus and a softer US dollar, which benefits export-driven economies.
  4. Gold:
    • Downgraded to a Core Holding, with near-term price targets at USD 3,100/oz and a 12-month target of USD 3,500/oz.
  5. High-Quality Bonds:
    • Still attractive at current elevated yields, offering stable returns in a volatile environment.

Macro Scenarios and Probabilities

Scenario Probability Key Drivers
Soft Landing 50% Trade truce, modest tax cuts, Fed rate cuts of 75bps starting H2 2025.
Hard Landing 25% Recession risk from failed trade talks and weak sentiment.
No Landing 25% Strong growth, tax cuts, deregulation.
S&P 500 could rise to 7,000.    

Equity Forecasts: Where to Look

Index 12M Forecast
S&P 500 6,520
Nasdaq 100 24,100
Hang Seng 26,260
Nifty 50 26,940
Euro Stoxx 50 5,880
FTSE 100 9,390
Nikkei 225 40,300

Opportunistic Equity Ideas

  1. US:
    • Focus on sectors like semiconductors, software, communication services, and major banks.
  2. China:
    • Non-financial high-dividend SOEs and the Hang Seng Tech Index are highlighted.
  3. Europe:
    • Banks and industrials offer potential upside.

Bond Strategy: New Opportunities

  1. New Bullish Views:
    • US 20Y+ Treasury Bonds and UK Gilts (FX unhedged).
  2. Still Bullish:
    • US Agency MBS and TIPS remain attractive.
  3. Downgrade:
    • Developed Market Investment-Grade Government Bonds were downgraded to a Core Holding due to inflation and fiscal risks.

FX Forecasts: What to Expect

Pair 3M Forecast 12M Forecast
USD (DXY) 103 98
EUR/USD 1.08 1.14
USD/SGD 1.32 1.34
USD/CNH 7.22 7.40

Are gold and oil moving in different directions?

Commodities: Gold and Oil

Commodity Details
Gold Near-term: Consolidation at USD 3,100/oz
12-month target: USD 3,500/oz
Oil (WTI) 3M forecast: USD 64/bbl
12M forecast: USD 60/bbl
Demand Trends Central bank buying remains strong, but signs of Asian buyer fatigue are emerging.

Technical & Quant Models

  1. Stock-Bond Rotation Model:
    • Slightly Overweight Equities, bullish short- and long-term.
  2. S&P 500 Levels:
    • Resistance: 6,088.
    • Support: 5,476.
  3. Bullish Bias Markets (short-term):
    • US, China, UK.
  4. Neutral:
    • Europe ex-UK, Asia ex-Japan, Japan.

Top Risks to Watch

  1. US Fiscal Deficit & Bond Yields:
    • Credit rating downgrade raises tail risk.
  2. Tariff Policy Reversal:
    • The July 2025 expiry of the US 90-day trade pause is critical.
  3. China:
    • Continued deflationary pressure; more stimulus expected.
  4. Europe:
    • Germany’s €500bn infrastructure plan may limit ECB rate cut scope.

Implications for Singaporeans

  1. Global Equity Rally:
    • A window for gains exists, especially in US and China’s equities.
    • Positive for Singaporeans exposed to HK-listed Chinese tech via ETFs or mutual funds.
  2. Singapore Dollar (SGD):
    • USD/SGD expected to rise to 1.34 in 12 months due to slowing growth and easing inflation.
    • MAS lowered core inflation targets; MTI cut 2025 GDP forecasts.
  3. Bond Yields:
    • Attractive opportunities in long-duration bonds like US 20Y+ Treasuries and UK Gilts.
  4. Gold Prices:
    • Near-term consolidation expected; consider holding rather than aggressively adding.
  5. Emerging Markets (EMs):
    • A weaker USD supports fund flows into EMs, benefiting Singapore-based investors with ASEAN or India exposure.
  6. Singapore REITs & Exporters:
    • Lower global rates could reduce financing costs, but tariffs may weigh on export demand.

Do’s for Singaporean Investors

Do Explanation
Rebalance into global equities, especially US and China Improved technicals and potential for further equity rally if trade deals materialise.
Add long-duration, high-quality bonds US 20Y+ Treasuries and UK Gilts offer attractive yields and diversification benefits.
Diversify regionally Avoid home bias; US, China, and EMs have different growth drivers.
Hold gold, not chase it Near-term consolidation expected; longer-term upside remains intact.
Consider FX impact on global investments USD rebound expected short-term, weakening longer term, therefore this affects SGD returns on foreign assets.
Monitor Trump policy dates July 2025 is critical (tariff pause expiry + tax cut proposals); expect market volatility.

Don’ts for Singaporean Investors

Don’t Reason
Go overweight on UK equities or defensive sectors UK downgraded to Underweight; defensive sectors may lag in a risk-on environment.
Ignore trade policy risks US policy remains unpredictable; soft landing is not guaranteed.
Chase short-term rallies blindly Much optimism is already priced in; further upside needs policy follow-through.
Assume SGD will remain strong MAS easing and lower inflation forecasts may weaken SGD over time.
Over-concentrate in local bonds Global bonds, especially US and UK, offer higher yields and diversification benefits.

Conclusion

The global rally appears to have room to run, with equities, high-quality bonds, and gold offering strategic opportunities.

However, Singaporean investors must navigate risks such as currency fluctuations, trade policy uncertainty, and slower domestic growth.

By rebalancing portfolios, diversifying regionally, and staying vigilant about macro risks, investors can position themselves to capitalize on the ongoing recovery while safeguarding against potential headwinds.

Is the global rally just getting started? For those who prepare wisely, the answer could very well be yes.

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