Local shares tumbled yesterday as nervous traders took stock of Italy's political crisis and more trade tensions between the United States and China.
The jitters sent the Straits Times Index (STI) diving 74.53 points, or 2.12 per cent, to 3,443.95 with 2.03 billion shares worth $1.9 billion changing hands. Losers trounced gainers 353 to 126.
The three banks, which comprise the lion's share of the STI, were hard hit, with DBS, UOB and OCBC down by around 3 per cent.
Singapore Exchange (SGX) fell 12 cents to $7.25. It announced late on Tuesday that it would hold back its launch of new India derivative products and head for arbitration in India to settle a dispute with the National Stock Exchange of India (NSE). This came after the Bombay High Court said it would rule on June 16 on an NSE injunction to block the SGX from launching the new products.
The red ink swamped other Asian markets as well with Japan's Nikkei down 1.5 per cent, while the South Korean Kospi lost 2 per cent and Shanghai was off 2.5 per cent. Hong Kong's Hang Seng was a little better, falling 1.4 per cent.
Italy's political crisis promises another election, one that could turn into an unofficial referendum on whether the country should leave the European Union.
This would be the bloc's biggest challenge since Britain voted to quit the union two years ago.
If that wasn't enough, traders also had to confront renewed concerns over US-China trade tensions after President Donald Trump said a finalised list on the planned US$50 billion (S$67 billion) tariffs on Chinese imports would be imposed soon.
"The level of US tariffs is in line with our expectations and, even with one-to-one retaliation from China, the short-term economic impact in China, the US and elsewhere is likely to be modest," said Oxford Economics in a note. "But... the US measures underscore that economic tension and rivalry between the world's two largest economies are on the rise."
The local bourse also stood no chance to gain yesterday after steep overnight losses in Europe and Wall Street.
More euro woes could come tomorrow when Spanish Prime Minister Mariano Rajoy faces a vote of no confidence in Parliament.
Apart from these issues, the market will be monitoring a string of important figures to be released in the US, including private hiring and the second estimate of first-quarter gross domestic product.