Shares across the region reeled yesterday on escalating fears of a trade war between the world's two largest economies.
The fear factor shot up when China responded to United States President Donald Trump's plans to slap tariffs on some 1,300 Chinese products, worth about US$50 billion (S$65.7 billion) annually.
In retaliation, Beijing said it would impose additional tariffs of 25 per cent on 106 US imports, including soya beans, vehicles, chemicals, some types of aircraft and corn products, among other agricultural goods - also worth around US$50 billion annually.
The trade feud sent stock markets tumbling.
The Straits Times Index (STI) fell 72.45 points, or 2.12 per cent, to 3,339.70. About $2 billion shares worth $1.6 billion were traded, with 112 gainers to 398 losers.
Bellwether stocks United Overseas Bank, DBS Group Holdings and OCBC Bank dealt the STI a major blow. UOB lost 68 cents to $26.28, DBS fell 71 cents to a near two-month low of $26.47, while OCBC lost 41 cents to $12.29, its lowest in over a month.
Venture Corp was also among the losers, down $1.27, or 4.6 per cent, to $26.60. BlackRock's deemed interest in Venture was pared from 5.27 per cent to 4.93 per cent after PNC Financial Services Group sold its stake in the Singapore company.
Sales trader Jane Fu at CMC Markets said 3,400 used to be a good technical support for the STI, but now, it is difficult to predict where the next support is.
"Given that China did not fix an effective date for the tariffs... there is still hope for further negotiations," she said. "The STI has shown pretty good resilience recently, though it tumbled on Wednesday. I believe the STI is still resilient."
All will depend on how the US markets and Mr Trump react to China's latest move. But based on the Dow Jones futures and the S&P 500 futures, indications are that they are headed south.
The news flow surrounding global tariffs has kept the gold market on its toes.
Mr Carsten Menke, a commodities research analyst at Julius Baer, believes there is a 20 per cent chance that the trade quarrels will turn uglier and escalate into a trade war.
"While the trade-war risk is not negligible, it is not meaningful enough to foresee a flight to safety, project a surge in investment demand and justify an increase of our gold price targets," he said.
"That said, in case of a trade war, gold would benefit as a safe haven and prices would rise."