SINGAPORE - Wall Street's Christmas Eve sell-off caught up with Singapore stocks on Wednesday (Dec 26), with the Straits Times Index down 1.43 per cent or 43.65 points to 3,007.41 at the open before paring losses slightly before lunchtime.
This came as United States President Donald Trump on Tuesday furthered his criticism of the Federal Reserve, saying the central bank was hiking interest rates too quickly. Just a day before, investors were still grappling with news of the US's partial government shutdown and US Treasury Secretary Steven Mnuchin calling top US bankers and making plans to convene a "Plunge Protection Team".
Japan stocks took most of the earlier heat, with the Nikkei sinking to a 20-month low on Tuesday. The Australian and Hong Kong stock markets were closed on Wednesday for a public holiday.
On the local bourse, financials traded firmly in the red. As at 10.37am, DBS was down 0.89 per cent to $23.36, while OCBC retreated almost a per cent to $10.95. UOB sank 1.35 per cent $24.08.
Tech stocks are also under pressure, with Venture Corp losing a per cent to $13.74. Creative Technology plummeted 13.83 per cent to $4.05.
With global oil prices remaining at lows, oil-linked counters may feel the heat too. Among actively traded stocks, Ezion Holdings lost 2.33 per cent to $0.042, Rex International fell 1.89 per cent to $0.052, and KrisEnergy went down 2.74 per cent to $0.071.
Mr Stephen Innes, head of Asia-Pacific trading at Oanda, said that fearmongering continues to permeate global capital markets, making it unclear if investors' cheerless mood will improve before the end of the year.
"While US futures have stabilised in early Asia-Pacific trade as we've seen so often over the last three months, downside momentum has a way of building through the day," he said.
With the risk-off sentiment in markets, investors may be looking for shelter in gold instead.
Mr Innes said the downdraft in global equity markets has firmed up the major support level for gold prices to U$1,255 levels.
He said: "The latest move on gold should be a stark reminder to investors that gold in any form should be an essential part of any long-term investment strategy, as again the yellow metal has proven its weight when markets turn turbulent."