Local stocks sagged yesterday after the long Hari Raya weekend, in the wake of Pyongyang's provocative nuclear test on Sunday.
The benchmark Straits Times Index was among the region's worst performers, sliding by 46.29 points, or 1.41 per cent, to close at 3,230.97 points - wiping out all of last week's 9.64-point gain and much more.
All three local banks saw their shares end the day lower.
DBS Group Holdings slid 27 cents, or 1.3 per cent, to $20.35, while United Overseas Bank sank 44 cents, or 1.8 per cent, to $23.59. OCBC Bank shed 25 cents, or 2.2 per cent, to $10.92.
SingTel was off by four cents, or 1.1 per cent, to close at $3.66.
Another loser was printed circuit board and semiconductor industry supplier Jadason Enterprises, which ended lower by 0.7 cent, or almost 6.9 per cent, at 9.5 cents.
RHB Securities Singapore earlier maintained its buy call on the company with a target price of 12 cents. Jadason has struggled with a labour crunch and delayed delivery of parts, but analyst Jarick Seet wrote in a note: "Two catalysts play in Jadason's favour: the overall recovery still on track and the iPhone 8 launch estimated this month."
Fingering reasons for the gloom, CMC Markets Singapore analyst Margaret Yang said: "The local shares market is lacking fresh catalysts after second-quarter earnings.
"Therefore, external factors such as US economic data, geopolitical issues and crude oil prices are going to dominate the movements in the local share markets in the short term."
The STI is trading in a consolidation phase, she added, pegging its immediate support and resistance levels at 3,240 points and 3,300 points respectively.
Pessimism prevailed around the region, with Tokyo giving up 0.93 per cent and Hong Kong lower by 0.76 per cent. As tensions mount on the Korean peninsula, Seoul dropped by 1.19 per cent.
Ms Selena Ling, head of treasury research and strategy at OCBC Bank, noted: "Amid heightened North Korean geopolitical tensions, flight to safety remains dominant, especially with the latest hydrogen bomb test."
Investors continue to take shelter, with the yen gaining on the greenback and gold hitting its highest point in almost a year.
DBS chief investment office strategist Dylan Cheang said political turmoil in the US and sabre-rattling in North Korea have together "heightened the risks of a sell-down in risk assets substantially".
"We believe that the (American) dollar's weakness is expected to persist and this augurs well for the outlook of the precious metal," he said.
"With inflation expectations staying depressed, it is likely that the US Federal Reserve will continue to adopt a 'gradualist' stance in its monetary normalisation process - another potential tailwind for gold prices."