The sharp sell-off could heighten this week if markets take their cue from Wall Street's extended losses last Friday that capped the worst week for United States stocks since the global financial crisis in 2008.
While fears over the Covid-19 contagion have been fuelling big losses in Asian equities since late January, the risk-averse behaviour hit investors in Europe and the US a little late. The trigger for the turn in sentiment came amid surging cases in Italy and warnings from US health officials of a sustained spread.
Last Friday, the Dow Jones fell 1.4 per cent and the S&P 500 dipped 0.8 per cent.
Singapore's Straits Times Index (STI) fared dismally as well, diving 100.62 points, or 3.2 per cent, to 3,011.08 - its largest single-day drop since August 2015.
CMC Markets analyst Margaret Yang noted: "The (US) sell-off has derailed from fundamental grounds, and has more to do with panic and fear."
Sentiment may be further dented after Saturday's Chinese Purchasing Managers' Index (PMI) readings for last month hit a record low.
More of the same is expected when the Caixin manufacturing and services PMIs, which focus more on small and medium-sized firms in China, are released today and Wednesday.
"China is the largest trading partner for most economies across the region, and with economic activity in China severely depleted by the virus, the repercussions will flow to the rest of the region," said Moody's Analytics in a report.
"Supply chains are disrupted, weakened economic demand in China is hurting demand for final goods, and commodity prices are slumping. There is no other country in Asia or globally that so many economies throughout the Asia-Pacific region are so heavily tied to."
Ms Yang noted: "Nobody can predict when a turnaround is on the horizon, especially when markets are in free fall. We will need to see US equities stop their bleeding before a recovery in Asia can be seen."
The length of the sell-off will depend on the escalation of Covid-19 disease globally, said Oanda Asia-Pacific senior market analyst Jeffrey Halley. He added: "We just don't know yet how this will resolve but I would argue that... even if the coronavirus magically disappeared tomorrow, equity markets would not bounce back at the same pace they are falling."
The Singapore economic docket is relatively empty this week but investors will be looking to tomorrow's official PMI reading for last month. It will be followed by the IHS Markit PMI survey on Wednesday.
The reporting season is near its end but a host of Jardine-linked large caps will post fourth-quarter earnings later in the week.
These includes Dairy Farm International, Hongkong Land, Jardine Matheson Holdings and Jardine Strategic Holdings.
