Stock markets in Asia remained on tenterhooks, as political and economic uncertainties continued to weigh on sentiment.
"Risk sentiment swung to the bearish side during the US trading session on Wednesday after White House adviser Larry Kudlow denied President Donald Trump's earlier gesture of a softened stance on China," said Ms Margaret Yang Yan, an analyst at CMC Markets in Singapore.
Pictet Asset Management chief strategist Luca Paolini did not think the United States and China would engage in a full-scale trade war, but there would be serious consequences if they did.
"Our model, which is based on IMF (International Monetary Fund) estimates, shows that if a 10 per cent tariff on US trade were fully passed on to the consumer, global inflation would rise by about 0.7 percentage point.
"This, in turn, could reduce corporate earnings by 2.5 per cent and cut global stocks' price-to-earnings ratios by up to 15 per cent."
This means global equities could fall by some 15 to 20 per cent, assuming that US bond yields rise in line with inflation.
Mr Paolini said this would turn the clock back on the world stock market by three years.
"Under such circumstances, the shares of Chinese exporters and cyclical US stocks - in particular, expensive sectors like consumer discretionary - would probably suffer the most," he warned.
Schroders downgraded equities to neutral in Europe, Japan, Asia-Pacific excluding Japan, and emerging markets.
The research house is positive on the US, which continues to be the most resilient economy, but it downgraded Europe as cyclical indicators point to a slowdown on the continent and earnings momentum. Political risk is another issue.
It also downgraded emerging markets. While valuations are deemed relatively attractive, trade tensions, elections and a stronger dollar may result in near-term headwinds.
The Straits Times Index (STI) opened at 3,245.92 yesterday and closed at 3,257.57.
Experts said 3,200 remains a key support, while a breach of resistance at 3,300 could signal a turn.
CapitaLand Retail China Trust, which is issuing a $130 million bond that will mature on July 4, 2022, ended at $1.540 a piece, up four cents, or 2.7 per cent.
United Overseas Bank gained 29 cents to $26.65 and OCBC was up 11 cents at $11.61. DBS, however, eased 12 cents to $26.49.
