Anxiety over sliding crude oil prices again sent jumpy investors scampering for the exits in a choppy day for Asian markets.
Crude oil benchmark Brent futures dipped below US$33 per barrel again yesterday after Saudi Arabia ruled out a coordinated oil production cut that the weak energy market sorely needs. The statement was poorly received by Wall Street, as the Dow Jones Industrial Average shed 1.14 per cent overnight.
Fresh data showing that the United States consumer confidence index dropped to a six-month low in January also piled pressure on sentiment, setting a bearish mood for markets in the Asia Pacific.
The local benchmark Straits Times Index dropped 52.11 points or 1.95 per cent to 2,619.96, snapping its recent good run. Investors were busy selling, as 1.26 billion shares worth $1.4 billion were done.
Tokyo slipped 0.85 per cent, Hong Kong dropped 1.15 per cent, and Sydney dived 2.1 per cent. Shanghai was an exception, rising 0.88 per cent in late reversal after a volatile session.
Barclays senior economist Leong Wai Ho sees more uncertainty ahead: "Oil prices are depressed not only on the supply side; demand from manufacturing countries is also weak."
In all, 26 of the 30 STI constituents closed lower yesterday amid the sell-off. Noble Group dropped 3.5 cents or 9.33 per cent to 34 cents, with 107 million shares transacted. The embattled commodity firm is being shorted, with short volume rising close to 80 per cent this week.
Noble, which will announce its results today, has earlier this week released a warning highlighting a net loss for 2015. The loss came from valuation adjustments made to reflect weak coal prices.
Sembcorp Marine and Keppel Corp both lost ground amid persistent negative talk over oil prices and contract woes. Sembcorp Marine pared seven cents or 4.28 per cent to $1.565, and Keppel Corp fell 22 cents or 4.17 per cent to $5.05.
The impact of the slumping oil prices has spread to downstream oil and gas service providers, DBS analyst Ho Pei Hwa noted. "Pacc Offshore Services has recently taken a US$148 million (S$208 million) impairment while Mermaid and Ezion have recently warned of asset impairments, guiding for a kitchen-sinking fourth quarter." Pacc Offshore Services closed flat at 29 cents. Mermaid Maritime was also flat, closing at 11 cents, while Ezion dropped one cent or 2 per cent to 49 cents.
CapitaLand was among the losing STI constituents, paring six cents or 2.05 per cent to $2.86. Its unveiling of an integrated project in the Orchard Road district this week did not impress investors as Singapore's property market remains in a down cycle.
Only two blue chips rose yesterday. Golden Agri-Resources gained one cent or 2.74 per cent to 37.5 cents while SIA Engineering put on two cents or 0.58 per cent to $3.46.