Markets across Asia saw red yesterday as traders took their cue from the sharp selldown on Wall Street and bolted for the exits.
The bloodletting was sparked by fears that United States President Donald Trump would fall short in his much-touted economic reforms.
The 1.14 per cent plunge in the Dow Jones Industrial Average on Tuesday set the tone for Asia, where Tokyo led the losses, diving 2.13 per cent - its biggest one-day decline since Mr Trump's election victory last November.
Hong Kong sank 1.11 per cent, Shanghai eased 0.5 per cent, while Sydney dropped 1.56 per cent.
Singapore's benchmark Straits Times Index was not spared, sliding 1.28 per cent and extending losses for the third straight day.
You have this back and forth in Congress with the new healthcare plan and you have this belief that if the healthcare plan can't pass, then they can't move on to taxes. There is this feeling that if things don't get done, then maybe what the market has been anticipating gets held up.
MR MARK KEPNER, managing director of Themis Trading, on fears over whether Mr Trump's economic plans can come to pass.
Ms Margaret Yang, a market analyst at CMC Markets Singapore, believes profit-taking activity in Asia is likely to accelerate as most markets have rallied over the past three months, "resulting in huge, unrealised gains".
The widespread pullback comes amid worries that Mr Trump's plans to fire up the world's largest economy would fall flat.
After hitting multiple records this month, all three major indices on Wall Street overnight suffered their worst losses since the presidential election last November, dragged down largely by financial stocks. The Dow's 1.14 per cent fall was its steepest one-day decline since last September, while the US dollar continued to struggle against other major currencies.
"For many, this signalled the market's impatience with the Trump administration's slow progress delivering on its pro-growth policies," DBS Group Research said in a note.
The key concern is with the upcoming vote in Congress on the replacement for Obamacare, with many Republicans opposed to the new legislation in its current form.
Analysts have noted that if Mr Trump is unable to push it through Republican-majority lawmakers, then his other plans - particularly infrastructure spending, tax cuts and deregulation - could be in trouble. Mr Trump's pro-growth agenda had been key in fuelling the rally across global markets in recent months.
"You have this back and forth in Congress with the new healthcare plan and you have this belief that if the healthcare plan can't pass, then they can't move on to taxes," Mr Mark Kepner, managing director of Themis Trading in Chatham, New Jersey, told Reuters.
"There is this feeling that if things don't get done, then maybe what the market has been anticipating gets held up."