Local investors took talk of trade tensions easing with a pinch of salt yesterday and stayed cautious.
The subdued mood left the Straits Times Index (STI) in the doldrums, although it did manage to inch up 2.19 points, or 0.07 per cent, to 3,067.52.
Regional markets, which faced sell-offs on Monday, mostly recovered, with Australia, China, Japan and South Korea closing higher.
Shanghai was the best performer, advancing 1.4 per cent, lifted by July's encouraging industrial data.
Hong Kong, where protests continue to be an overhang on the economy and investor sentiment, closed lower, as did Malaysia.
Yesterday's relief rally is unlikely to have a lasting effect and investors will not be faulted for querying whether the United States or China wants a trade deal at present.
VM Markets managing partner Stephen Innes noted: "While headline ping pong is expected to continue, there remains a high degree of scepticism regarding the sincerity of Trump's comments or even if the Chinese are willing to recommence with negotiations."
Moreover, with tariffs to be implemented by both parties next week, the case for continued demand in safe havens carries weight.
In Singapore, trading volume stood at 1.18 billion shares worth $1.24 billion, with losers trumping gainers 219 to 171.
Yangzijiang Shipbuilding continued its run as the STI's most active counter, with 62.2 million shares traded as it pared Monday's gains, finishing down 4.2 per cent at 90.5 cents. Since resuming trading on Aug 15, the counter has the highest average daily trading volume. Data suggests that institutional investors have been net sellers and retail investors net buyers of the stock.
The banks were higher. DBS closed 0.3 per cent up at $24.17, OCBC added 0.4 per cent to $10.58 and UOB up 0.04 per cent to $24.46.
Trade uncertainties and low interest rates to support slowing economies remain key drivers of market sentiment, with real estate investment trusts (Reits) continuing to see interest.
"In general, we get the sense that most investors are defensive and interested in S-Reits, but sceptical of investing in off-benchmark names," said Citi Research analysts.
While Reit sectors are "not immune from headwinds", the analysts "believe retail is the most favourable in terms of earnings quality and growth". Citi's top picks are CapitaLand Mall Trust (down 1.1 per cent to $2.60), Mapletree Industrial Trust (down 1.3 per cent to $2.25) and ESR-Reit (up 1 per cent to 51.5 cents).