Singapore put in a weak showing, along with Wall Street and several major regional markets, after the oil price plummeted overnight.
At the same time, unexpectedly strong new jobs data in the United States sowed fears that the Federal Reserve may lift interest rates more quickly than expected.
The Straits Times Index fell 26.45 points or 0.84 per cent to 3,118.84.
The total market turnover slowed further, with only 1.83 billion shares worth $967.6 million changing hands.
Other markets fared poorly too.
Hong Kong dipped 1.18 per cent, Shanghai lost 0.74 per cent and Sydney was down 0.32 per cent - in the wake of a 0.33 per cent drop logged by the Dow Jones Industrial Average.
Investors were jolted when the ADP Research Institute found that US private-sector jobs surged by 298,000 last month, much higher than the previous forecast of 190,000.
The ADP data is different from the official payroll data out today but the trend is unmistakable.
"There are fears that not only will the Fed hike interest rates in March, they may even hike the trajectory of rates," NRA Securities research director Liu Jinshu told Reuters.
Meanwhile, crude oil benchmark Brent futures continued to drop, after the overnight 5 per cent plunge, to below US$52 a barrel by last evening. The dramatic fall came after the US' crude oil inventory shot up to a record high, latest official figures showed.
Unsurprisingly, players linked to the oil and gas sector ended in the red. Keppel Corp was among the 25 STI stocks that fell, losing 12 cents or 1.73 per cent to $6.83.
Sembcorp Industries dropped five cents or 1.53 per cent to $3.22.
Sembcorp Marine pared 4.5 cents or 2.29 per cent to $1.92.
AusGroup was down by 0.2 cent or 3.77 per cent to 5.1 cents.
Real estate investment trusts and property firms were also sold down owing to the perception of a higher exposure to an interest rate impact.
Ascendas Reit eased four cents or 1.61 per cent to $2.45. CapitaLand Commercial Trust closed down two cents or 1.29 per cent at $1.525.
UOL Group slipped six cents or 0.9 per cent to $6.62 but the developer has the confidence of OCBC analyst Eli Lee who pointed to the brisk sales at the Clement Canopy condo launch.
Only five STI stocks gained yesterday, led by Hutchison Port Holdings Trust which rose half a US cent or 1.27 per cent to 40 US cents.
Thai Beverage closed up one cent or 1.07 per cent to 94.5 cents.
Meanwhile, ISR Capital lost another 0.8 cent or 26.67 per cent to 2.2 cents yesterday.
The stock had just resumed trading earlier this week after a suspension of more than three months.
But news that its shares might have benefited from the alleged manipulation by businessman John Soh had led to major sell-offs since.