Local shares got the shakes again yesterday after a few days of respite, with blue chips leading the market into negative territory.
The sell-off sent the Straits Times Index (STI) down 34.5 points, or 1.17 per cent, to 2,921.4.
The STI had recovered to 2,955.9 at last Friday's close after a sharp fall to 2,843.39 on Aug 24 as analysts and investors thought steep declines in markets around the world might cause the Fed to defer increasing interest rates.
Their belief was also bolstered when New York Fed president William Dudley last week said that "international developments" had made the case for a rate rise in September "less compelling".
However, they were put on edge by weekend comments by a United States Federal Reserve member that a rate rise might still happen this month despite the global market turmoil last week.
The uncertainty sent Singtel down six cents, or 1.58 per cent, to $3.74, while Keppel Corp fell 20 cents, or 2.84 per cent, to $6.84.
Banking counters took a hit as well. DBS slid 25 cents, or 1.39 per cent, to $17.76, OCBC fell 17 cents, or 1.87 per cent, to $8.93 and UOB declined 37 cents, or 1.87 per cent, to $19.38.
But commodities firms bucked the trend, spurred in part by the rise in oil prices at the end of last week, said CMC Markets analyst Nicholas Teo.
Noble Group was the STI's top gainer, up 2.5 cents, or 4.81 per cent, to 54.5 cents, while oilfield services firm Ezra Holdings gained 0.8 cents, or 6.56 per cent, to 13 cents.
Ezion gained 1.5 cents, or 2.13 per cent, to 72 cents.
Noble's rise could have been triggered by the announcement by Olam last Friday that Mitsubishi Corporation was making an investment in the company.
Olam's share price closed 8.4 per cent higher last Friday at $2.07 and closed unchanged yesterday.
Noble had hinted in the past that it could be working on a merger and acquisition deal, a prospect that may have whetted investor appetites yesterday after they saw the market reaction to Olam's announcement, said Mr Teo.
Elsewhere, Hong Kong rose 0.27 per cent yesterday, Japan fell 1.3 per cent and Shanghai declined 0.82 per cent.
Should US rates rise, emerging market stocks would likely decline, an economics research paper by Natixis, which studied market data of the last few years, suggested.
It said that equity indexes notably in Indonesia and Turkey tend to fall when US Treasury yields rise.
It also said that emerging market equities tend to weaken should US 10-year treasury rates rise and commodity prices fall.