The annual Mid-Autumn Festival kept many Asian markets closed yesterday and trade was muted in those that were open.
Investors were all too aware that political and trade issues remain on the boil, especially after the new round of tit-for-tat tariffs imposed by the United States and China, but the effect of the latest moves was blunted as major Asian bourses like Tokyo, Shanghai and Seoul were shut yesterday.
The Hong Kong bourse will be shut today. Traders there might welcome the break, given that the index was hit by Hong Kong-listed property stocks yesterday, and ended 1.62 per cent lower.
Despite markets appearing to have priced in the trade war, investors are increasingly worried that it may enter "phase III", said FXTM chief market strategist Hussein Sayed. "With Beijing cancelling planned trade talks on Saturday and the US State Department imposing sanctions against China's defence agency, relations between the two largest economies in the world may further deteriorate.
"If President Donald Trump follows through on his promises to impose further tariffs on the remaining US$267 billion (S$365 billion) of Chinese imports, investors may consider it as a signal to move out of US equities."
The wary mood left the key Straits Times Index (STI) flat with shares inching up 0.05 per cent, or 1.48 points, to 3,219.16.
Gainers outnumbered losers 212 to 165 on turnover of 1.05 billion shares worth $801 million. The most active was Rex International with 74.44 million shares changing hands as it rose 1.84 per cent to 11.1 cents.
UOB stood out, rising 1.43 per cent, or 38 cents, to $26.88.
The tech sector was buffeted by the effects of the tariffs. AEM shed 2.72 per cent to 71.5 cents while Hi-P closed 2.67 per cent lower at 91 cents and Venture Corp fell 0.52 per cent to $17.36.
Keppel Corp ended 0.43 per cent lower at $7. It announced earlier that it was considering a potential transaction in logistics and data centre arm Keppel Telecommunications & Transportation. The conglomerate had also approached Singapore Press Holdings to take part in a possible transaction involving its stake in listed telco M1. SPH shares eased 0.71 per cent to $2.80.
The announcements brought fresh hope for a potential sale after an earlier attempt, noted CMC Markets analyst Margaret Yang, despite both Keppel and SPH cautioning that there was "no certainty or assurance" of any sale occurring.
