Regional markets were all singing the same gloomy tune yesterday after a surprise move from China's central bank to raise borrowing costs hours after the United States hiked its interest rates.
The sour mood sent the benchmark Straits Times Index down 32.99 points or 0.95 per cent to 3,435.78.
Falls by the three lenders did the most damage, accounting for a combined 21 points, with Singtel and Keppel Corp doing their bit as well.
Key indices in Japan, Hong Kong, Seoul, Shanghai and Australia ended on a glum note while New Zealand shares hit a fresh high.
The Chinese rate hike was the third this year.
Mr Tommy Xie, economist from global treasury research and strategy at OCBC Bank , said the move indicated that the "US Fed policy is still one of the parameters influencing the People's Bank of China decision-making", and that "China shows no signs of fatigue in financial de-leveraging".
Franklin Templeton Fixed Income Group's chief investment officer Christopher Molumphy noted that US interest rates remain quite low, and are only just returning to more "normalised" levels. He believes the US economy will be on a similar course in the coming year, but is concerned over inflation, the Federal Reserve's balance sheet reduction efforts and an ageing business cycle.
Chinese data yesterday showed retail sales gained 10.2 per cent in November over the same month last year, in line with expectations, while industrial output expanded at a faster-than-expected pace. But these were overshadowed by the rate rise.
Back home, turnover came in at 1.3 billion shares valued at $980.3 million, with losers beating gainers 196 to 179. Developer Bukit Sembawang surged 17 cents to $6.10 after Maybank Kim Eng placed a "buy" call with a target price of $8.25.
Oil and gas plays were heavily traded following the rise in crude prices. Magnus Energy closed unchanged at 0.1 cent on a volume of 52 million, GSS Energy added 1.2 cents to 16.8 cents with 34 million units traded, and Yangzijiang Shipbuilding ended one cent higher at $1.52 on trade of 11 million.
OCBC economist Barnabas Gan said more uncertainties await in 2018: "Geopolitical tensions remain high on our list, while energy demand could moderate into the year."
He said a further crude price hike "could well be met by stronger US production as shale oil players turn taps on, suggesting that upside risks could well be limited into 2018."