Executive Summary
July was a fantastic month for stocks, reaching new highs supported by strong AI earnings, low inflation, and a weaker SGD boosting portfolios. Key indices including the S&P 500, Hang Seng Index, and Straits Times Index posted solid gains. Dimensional funds, particularly in emerging markets, performed well with the market recovery. Although tariffs are beginning to affect prices, the full impact remains uncertain. Despite a strong rebound since April, investors should prepare for possible volatility in the second half of 2025. Providend advises focusing on long-term goals and risk tolerance instead of timing the market.
July’s Performance
July proved to be a fantastic month for stocks as markets roared their way to new all-time highs, supported by strong earnings from AI-related companies, and low inflation data despite the tariff overhang. Additionally, our portfolios in SGD received a boost from the weaker SGD in July.
Global Stock Market Highlights
The S&P 500 rose 2.17% in July, setting 10 new all-time highs, driven by strong earnings in AI and tech sectors. This brought its YTD performance to +7.8%. While a lot of investor focus has typically been on the US stock market, in 2025, it continues to underperform Asia and highlights the benefits of investing in a globally diversified portfolio.
The Hang Seng Index surged 4.4% in July, adding to its strong 22% YTD rise, boosted by China’s tech launches and biotech deals. Our local Straits Times Index (STI) climbed 6.2% in July, reaching 4,208, a new all-time high, adding to its 11.1% YTD rise, supported by government initiatives and strong dividend-paying sectors. (In USD terms, the STI is up 16% through the end of July).
Europe had a more muted July, with the Stoxx Europe 600 gaining 1% in July, continuing a four-month rally driven by earnings optimism and easing trade concerns.
Dimensional Fund’s Performance
Our Dimensional funds did well in July, in line with the stock market recovery. The SGD equity funds showed strong performance in July, particularly in emerging markets. (See Exhibit 1) The Dimensional EM Large Cap Core Equity Fund led with a 3.95% monthly return and is up 10.58% YTD. The Dimensional World Equity Fund and Global Core Equity Fund posted solid July returns of 3.02% and 2.97%, respectively. Lastly, the Global Targeted Value Fund rebounded by 2.25% for the month, lifting its YTD performance to 0.51%.
Exhibit 1: Dimensional Equity Fund Performance in SGD July 2025 and YTD 31 July 2025
USD equity funds maintained strong YTD performance, though July returns were more subdued (See Exhibit 2). The Dimensional EM Large Cap Core Equity Fund returned 1.81% in July and a stellar 16.31% YTD. The World Equity USD Fund and Global Core Equity USD Fund gained 0.86% and 0.83%, respectively. The Global Targeted Value USD Fund had a modest 0.14% July return, but a solid 5.77% YTD. This highlights that the performance of the funds in USD has been strong, and the lower returns that we see in SGD are due to currency market moves.
Exhibit 2: Dimensional Equity Fund Performance in USD July 2025 and YTD 31 July 2025
Returns in fixed income were generally positive, with only the Global Core Fixed Income SGD fund declining by -0.09% in July. The rest of the short-term funds posted modest gains of 0.14% and 0.27% (Short Term Fixed and Short Term Investment Grade respectively), while all USD fixed income funds posted positive July returns.
The Short-Term Investment Grade FI USD Fund led with 0.48%, and 2.98% YTD, while the Global Core Fixed Income USD Fund and the Short-Term Fixed Income USD Fund returned 0.17% and 0.35%, respectively.
Exhibit 3: Dimensional FI Fund Performance in SGD July 2025 and YTD 31 July 2025
Exhibit 4: Dimensional FI Fund Performance in USD July 2025 and YTD 31 July 2025
Why Did Stocks Do Well in July?
Global stock markets reached new all-time highs in July 2025, driven by a combination of strong corporate earnings, favourable inflation data, and positive macroeconomic developments across major economies.
In the US, earnings season exceeded expectations, particularly in the technology and consumer discretionary sectors. Companies like Microsoft, Meta, and Nvidia reported robust quarterly results, fuelled by continued investment in artificial intelligence and cloud infrastructure. Over 80% of S&P 500 companies that have reported 2Q earnings so far (34% of companies have reported) beat analyst estimates, reinforcing investor confidence and driving equity prices higher.
Inflation data released during the month were generally benign, with the impact of higher tariffs yet to show in the data. In the United States, the Consumer Price Index (CPI) rose 0.3% in line with expectations and Core CPI came in at 0.2%, which was below expectations. This led to speculation that the path to a Federal Reserve (Fed) rate cut later in 2025 would be clearer, and also supported the risk on equity trade and pushed markets higher over the month.
Easing trade tensions between the US and China boosted the Hang Seng Index. Investors were cheered by the news of loosening chip export restrictions, alongside the knowledge that negotiations on tariffs between China and the US were on a separate timeline with a later deadline as compared to the rest of the world.
Singapore’s Straits Times Index benefited from government initiatives like the Equity Market Development Programme, which injected capital into local equities. The announcement of SGD 1.1 billion to be allocated to three asset managers, Avanda, JP Morgan and Fullerton in July provided a boost for the local market, which has also been supported by a return of capital to the region as the weaker USD and geopolitical uncertainty drove investor flows back into Singapore equities. The lower SGD yield with T-bills falling from above 4% yield at the end of 2023, to 1.77% at the end of July has also driven risk-averse investors to look for higher yields, with the big three banks and the relatively higher STI dividend yield attracting investors back to local stocks.
Storm Clouds Ahead: Tariff Impact Has Yet to Materialise
We look a little deeper into the impact of tariffs, from a J.P. Morgan wealth management report titled: June 2025 CPI report – Tariffs are having an impact on consumer prices.
The June 2025 Consumer Price Index (CPI) report reveals a 0.3% increase from the previous month, a figure that aligns with market expectations. However, a closer look at the data reveals a more nuanced picture. The core CPI, which excludes the volatile food and energy sectors, rose by a slightly lower-than-expected 0.2%. While these headline numbers may suggest a degree of stability, the report highlights underlying shifts that are directly influenced by tariffs.
One of the most notable trends is the year-to-date increase in the cost of household furnishings and operations. This is significant because a large portion of these goods, approximately two-thirds of household furniture and many other household items, are imported. The report emphasises that fluctuations in tariffs can, therefore, have a substantial and direct effect on consumer prices in this sector.
The report also provides a broader historical context for inflation. The CPI for all items less food and energy, after peaking at 6.5% in March 2022, has been on a downward trend, reaching 2.9% by June 2025. In contrast, the CPI for household furnishings and operations has shown more volatility. After a significant decline from its peak of 10.1% in March 2022, it has seen a sharp increase in 2025, reaching 3.3% in June. This resurgence is a clear indicator of the growing impact of tariffs on consumer prices.
The report also highlights growing concern expressed by businesses as evidenced by the Institute for Supply Management’s data: the Prices Index remains high at 69.7, while the New Orders Index has contracted for five consecutive months, now at 46.4. This divergence signals rising costs and weakening demand, posing challenges to corporate profitability and economic growth.
According to data from the Yale Budge Lab, after the 1 August tariff rates took effect, consumers are looking at an average effective tariff rate of 18.6%, the highest since 1934. So far, price impact has been muted because companies have been hesitant to pass on price increases as the final tariff rates were unclear due to the 90-day pause. However, now that it is clear that tariffs are here to stay, it is possible that companies unable to maintain profitability without raising prices will choose to implement some.
How the increased prices will look is still uncertain, and the market impact is also uncertain. It is possible that stocks have priced in the impact, or investors are waiting for more data to revise their return assumptions. However, while markets have been doing well for the first half of 2025, we should be mentally prepared for possible volatility in the second half of 2025.
Managing the Uncertainty of Markets
At Providend, we recognise that attempting to predict the future or time the market is a futile endeavour. Markets are inherently unpredictable, as demonstrated by their strong rebound from April lows despite tariffs only taking effect in August. The wise approach is to accept uncertainty and avoid impulsive responses to fleeting market events.
Instead, we encourage you to thoughtfully review your ikigai goals and financial plans, making investment adjustments aligned with your risk tolerance and evolving life goals. If the volatility in April has caused you discomfort, or if recent uncertainties have shifted your priorities, we recommend having a thorough conversation with your Client Adviser. Together, you can evaluate whether it is appropriate to recalibrate your investment risk to better meet your return expectations and personal circumstances.
Please do not hesitate to reach out to your Client Adviser if you have any questions, and we thank you for your continued trust and support.
For more related resources, check out:
1. Active Investing That Adds Value to the Client
2. Staying the Course: Investing With Confidence in Uncertain Times
3. Here’s Why We Charge a Higher Fee Than Robos
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