Weaker oil prices and a wait-and- see approach from investors ahead of a speech by the United States Federal Reserve chair late last night sent local shares down yesterday.
The Straits Times Index fell 11.21 points or 0.4 per cent to 2,819.08 amid uncertainty ahead of Dr Janet Yellen's speech, which may indicate where interest rates are heading.
Remisier Desmond Leong said: "It's a healthy correction. Whether this is a continuation of a bear trend, it's too early to say... Near-term support for the STI is seen at 2,770 and 2,800.
"There was a bit of profit-taking, and (investors) were apprehensive ahead of the speech."
There were signals last week from the US that interest rates might be lifted as early as next month but lacklustre consumer spending and inflation data on Monday suggest that there could be a delay.
The STI was weighed down by Singtel, Keppel Corp, Thai Beverage and Golden Agri-Resources. Thai Beverage lost 1.4 per cent or one cent to 71.5 cents while Golden Agri-Resources fell 3.6 per cent or 1.5 cents to 40.5 cents. Singtel slipped 0.8 per cent or three cents to $3.79. Nomura Global Markets Research, which has a buy call on the telco, said it is a "safer, more defensive and diversified stock to own" amid the discussion on the fourth mobile entrant in Singapore.
Oil prices lost steam yesterday, falling below US$40 a barrel as analysts expect another rise in US stockpiles. That weighed on oil-related counters, including Keppel, which fell 1.9 per cent or 11 cents to $5.78, and Ezra Holdings, down 3.54 per cent or 0.4 cent to 10.9 cents, with 72.3 million shares traded.
Rex International slipped 5.7 per cent or 0.7 cent to 11.6 cents on trade of 63.9 million shares.
Terratech Group jumped 10.9 per cent or 0.5 cent to 5.1 cents after the marble producer proposed a private placement of up to 74 million new shares at 4.05 cents apiece to raise $3 million for exploring investments. Some 40.4 million shares of Terratech changed hands yesterday.
Other hotly traded stocks included social e-commerce firm YuuZoo, which rose 7.6 per cent or 1.4 cents to 19.9 cents, with 83.2 million shares traded. OKH Global fell 4.3 per cent or 0.6 cent to 13.4 cents on trade of 81.4 million shares.
Traders are also watching for China's purchasing managers index data tomorrow for signs of whether its economic slowdown has accelerated. US non-farm payrolls and unemployment data due on Friday are also on their radar.
According to SGX My Gateway, in the month so far, five STI Reserve List stocks, namely, First Resources, Keppel Reit, Singapore Post, Suntec Reit and Neptune Orient Lines, have averaged a 5.4 per cent total return and maintained a dividend yield of 4.6 per cent. If an existing constituent is removed from the STI for not meeting index criteria, the new index entrant could potentially be from the STI Reserve List.