OCBC Investment Research
Date of Report: 14 August 2025

Global Markets Rally Amid Fed Rate Cut Hopes and Geopolitical Tensions: Key Insights and Singapore Market Highlights

Market Overview: US Rate Cut Optimism and Record Highs

Major US stock indices rallied to new record highs as muted inflation data amplified investor conviction that the Federal Reserve will lower interest rates in September. This sentiment was further buoyed by emerging signs of a weakening labor market, with the market fully pricing in a 25-basis-point cut and some participants, including Treasury Secretary Scott Bessent, floating the possibility of a 50-basis-point reduction to kickstart a series of cuts.

• Fed’s current benchmark rate: 4.25% to 4.5%
• Subdued inflation: Underlying inflation accelerated in July, but tariff-affected goods did not rise as much as expected.
• US Treasuries advanced alongside equities, an unusual pairing that reflects the depth of rate-cut expectations.

Lower rates are anticipated to encourage borrowing, spending, home purchases, and business hiring. However, with some companies delaying price increases over concerns about consumer spending, upcoming retail sales and consumer sentiment reports, as well as Thursday’s producer price data, are highly anticipated for further direction.

Geopolitically, the US President issued stern warnings to Russia, threatening “very severe consequences” should President Putin fail to agree to a ceasefire in upcoming talks.

Asia-Pacific Markets Surge on US Sentiment

Asian equities surged, with the MSCI Asia Pacific Index up as much as 1.5%. The Hang Seng Tech Index soared over 3%, driven by overnight gains in the Nasdaq 100 and robust liquidity in Chinese markets. Japanese and Hong Kong stocks led regional advances as risk appetite improved.

Singapore Market Snapshot

• Volume: 1,865.7 million (+37.4%)
• Turnover: 1,938.6 million (+25.7%)
• 52-week range: 3,258.8 – 4,274.3
• Gainers/Losers: 397 / 182

Key World Indices

FX and Commodity Prices

In-Depth Company Updates and Analyst Recommendations

Stoneweg Europe Stapled Trust (SERT SP): Steady Progress Amid Higher Costs

• 1H25 distribution per stapled security (DPS): 6.553 Euro cents, down 7% YoY but in line with expectations.
• Gross revenue and net property income (NPI): EUR107.4m (+1.1% YoY) and EUR66.9m (+2.2% YoY).
• Distributable income fell 7.3% YoY to EUR36.7m due to higher interest costs from refinancing a EUR450m bond (2.1%) with a EUR500m bond (4.25%).
• Portfolio occupancy improved to 92.4% (+0.4 ppt QoQ), with the logistics & industrial (L&I) portfolio at 94.4% and office occupancy at 86.2%.
• Portfolio rental reversions surged to +11.9%; office rental reversions notably rebounded to +17.5% in 2Q25.
• Aggregate leverage increased slightly to 43.3% (from 42.9%) due to investment in AiOnX and higher portfolio valuations.
• All-in interest rate improved 19 bps to 3.97%; 85% of debt is hedged.
• Updated fair value estimate: EUR1.82 (previously EUR1.81). Rating: BUY.
• ESG: SERT’s rating was downgraded in Dec 2024 due to non-pay benefits. Noteworthy ESG strengths include 22.6 training hours per employee and a majority-independent board. SERT holds 48 green building certificates and targets net zero operational carbon emissions by 2040.

City Developments Ltd (CIT SP): Poised for Higher FY25 Dividends

• 1H25 PATMI: SGD91.2m (+3.9% YoY), dampened by negative FX impact and lower divestment gains vs. 1H24.
• Revenue grew 8% YoY to SGD1,687.9m, led by property development.
• Residential unit sales in Singapore: SGD2.2b (+90.4% YoY).
• Share of profits from associates and JVs soared to SGD126.1m (+599.1% YoY), reflecting contributions from Copen Grand EC and other JV projects.
• Declared special interim DPS: 3 Singapore cents (vs. 2 cents in 1H24). Core PATMI estimated at SGD62.4m (22.2% of FY25 forecast, below expectations).
• Capital recycling robust: Contracted divestments exceed SGD1.5b YTD, with the major South Beach transaction (SGD2.75b on a 100% basis). CDL has tendered for three GLS sites (SGD1.2b).
• Net gearing: 70% (targeting high-50% to low-60% medium-term). Average borrowing cost fell 40 bps HoH to 4.0%, with further declines expected.
• FY25 and FY26 PATMI forecasts cut by 26% and 13%, but RNAV discount narrowed to 50% (from 54%) due to board stability and core central region recovery. New fair value: SGD6.87 (from SGD6.01). Rating: HOLD.
• ESG: CDL maintains the highest ESG rating, leading peers in energy and water management. CDL targets net zero operational carbon by 2030 and full life-cycle carbon neutrality by 2050.

Latest Analyst Recommendations: Key Stocks at a Glance

Singapore Blue-Chip Stocks: Market Capitalisation and Analyst Ratings

Conclusion: Strategic Insights for Investors

With global markets buoyed by expectations of US rate cuts and Asia Pacific stocks surging on risk-on sentiment, investors should focus on companies with strong fundamentals and proactive capital management. The Singapore market, in particular, showcases resilience and growth opportunities, especially among blue-chip stocks and select REITs. Continued monitoring of macroeconomic indicators, policy shifts, and company-specific developments will be crucial in navigating the months ahead.

For further in-depth analysis and tailored recommendations, consult the latest detailed reports from OCBC Investment Research.