OCBC Investment Research
Date of Report: 25 June 2025

Singapore Market Outlook: A Steady Anchor in Global Volatility as Middle East Tensions Flare

Global Markets Rally Amid Fragile Ceasefire and Fed Rate Cut Hopes

Global stock markets rebounded as easing tensions in the Middle East and dovish signals from Federal Reserve Chair Jerome Powell buoyed investor sentiment. US equities led the rally, with all three major indices rising over 1%—the Nasdaq 100 closed at an all-time high, powered by artificial intelligence stocks, while the S&P 500 approached its own record. A tentative ceasefire between Iran and Israel, announced by President Donald Trump, momentarily calmed oil markets, driving West Texas Intermediate crude prices down 6% to US\$64.37 per barrel. Still, the truce remains fragile, and investors are wary of a potential resurgence in conflict or new geopolitical flashpoints.

United States: All Eyes on the Fed and Trade Policy

• Major indices soared as markets priced in two Fed rate cuts this year.
• Powell’s Congressional testimony signaled flexibility, stating cuts could come soon if inflation continues to cool, though he stopped short of promising action at the July meeting.
• Investors remain cautious, mindful that tariffs—central to Trump administration policy—could keep inflation elevated, especially if retaliatory actions from the EU materialize.
• Oil prices tumbled as supply fears faded, but any future disruption to the Strait of Hormuz could quickly reverse the trend.

Europe: Resilience Amid Trade Tensions

• Stoxx Europe 600 Index rose 1.1%, with Germany’s DAX up 1.6%.
• Energy stocks lagged as oil retreated, while the UBS basket of airline stocks soared 6%, the strongest since April.
• Germany’s Ifo Business Climate beat expectations, signaling that Europe’s largest economy remains robust despite global trade frictions.

Asia: Technology Surge Leads Market Gains

• The MSCI Asia Pacific Index jumped 2.3%, led by a sharp rotation into technology shares.
• Investors moved away from recently favored oil and defense stocks, reflecting the shifting risk landscape.

Singapore Market Performance and Statistics

Trading volume reached 1,159 million shares (-0.2%), with turnover at \$1,336.3 million (+5.0%). The 52-week range for the STI was 3,198.4 to 4,005.2. Market breadth was positive with 345 gainers to 175 losers.

Key World Index Performance

FX & Commodities Snapshot

• USDSGD: 1.2798 (+0.4%)
• USDJPY: 144.94 (+0.8%)
• USDCNY: 7.172 (+0.1%)
• WTI Crude: \$64.37/bbl (-6.0%)
• Brent: \$67.14/bbl (-6.1%)
• Gold: \$3,323.7/oz (-1.3%)
• Silver: \$35.92/oz (-0.5%)

Singapore Strategy: Navigating Global Headwinds

The recent US strike on Iranian nuclear sites has heightened global risk and triggered sharp swings in oil prices, raising fears of a potential closure of the Strait of Hormuz, a chokepoint for about 20% of global oil supply. Prolonged instability could disrupt energy markets, global supply chains, and corporate earnings, particularly in sectors reliant on oil or international trade. Defensive sectors—such as energy, consumer, healthcare, technology, and infrastructure—may show resilience, but broader headwinds remain unless the ceasefire holds.

For Singapore, sustained volatility in oil prices and global equities could impact inflation, trade, and economic growth, especially given the city-state’s high dependence on global trade. While Singapore’s energy transition strategy offers some insulation, immediate spikes in oil prices will still pressure transportation, manufacturing, and consumers. Investors are likely to adopt a risk-averse stance, potentially moving funds into safe-haven assets like gold and defensive Singapore equities, such as Sembcorp Industries and selected oil and gas counters.

Singapore Market Recap and Outlook

The Straits Times Index (STI) has experienced significant volatility in 2025, swinging between a high of 4,005.18 (28 March) and a low of 3,372.38 (9 April)—a 633-point range. The market has since stabilized within a narrower 91-point band (3,845–3,936) from May to June despite ongoing Middle East tensions. Volatility is expected to remain elevated in the second half of 2025, with global markets also experiencing unusually wide trading ranges in response to geopolitical and trade developments.

Comprehensive STI Stock Review: Top 30 Companies by Market Capitalization

Conclusion: Singapore’s Stability in an Uncertain World

With global markets on edge due to geopolitical and economic uncertainties, Singapore’s diversified, resilient market remains a safe harbor for investors. Defensive and industrial names, strong dividend yields, and prudent fiscal management provide a measure of stability even as volatility persists. Investors should continue monitoring global events, shifting asset allocations as necessary to balance risk and reward in the months ahead.