A robust performance on Wall Street overnight gave local investors some heart early yesterday, but the mood was derailed on more trade war concerns.
The souring sentiment left the Straits Times Index down 0.1 per cent or 3.04 points to 3,235.90.
Turnover was 1.84 billion shares worth $1.13 billion, with 202 losers to 176 gainers.It was much the same across Asia, with shares staying depressed on trade tensions between the United States and China, and the Friday deadline when the US is set to impose levies on about US$34 billion (S$46.5 billion) worth of Chinese exports.
In the local shipping segment, Yangzijiang Shipbuilding added 0.5 cent to 89 cents with 24.93 million shares traded, making it one of the most heavily traded counters.
DBS Group Research said in a "buy" note yesterday that its shares are set for a rebound, due to the firm's "healthy order backlog" of US$4.5 billion and a strengthened US dollar. It has a $1.82 target price.
The worst seems to be over for CNMC Goldmine, according to KGI Securities, with the broker setting a 38 cent target price on a "buy" call. The stock closed 1.85 per cent down at 26.5 cents.
Indofood Agri Resources is set to invest in a Brazilian sugar processor in a deal valued at around 75.9 million Brazilian real (S$26.5 million). Indofood closed down 2.27 per cent to 21.5 cents.
DBS chief economist Taimur Baig warned in a research note that, while he still thinks the possibility of a full-blown trade war appears unlikely, "the harsh rhetoric and punitive measures have reached a point that warrants serious consideration of such eventualities".
"These are early days, but signs of real damage have begun to surface with announcements of postponed or redirected investments."
Such a war would set off a major global chain reaction and there will be "no respite" for economies like Singapore, Malaysia, South Korea and Taiwan due to their trade openness and exposure to the electronics supply chain, Mr Baig said.
"An all-out trade war, which we define to be 15 to 25 per cent tariffs on all products that are traded between China and the US, could shave off a quarter per cent of GDP to both economies this year, while the damage would be far greater in 2019, with both countries looking at half a per cent or more of GDP downside," he noted.
"Considering that China grows at 6 to 7 per cent and the US at 2 to 3 per cent, we believe the damage would be greater to the US than to China."