Investors are becoming increasingly jittery in the lead-up to the United States-China trade talks later today. While the nerves were not noticeable during Tuesday's session across the region, they were certainly evident yesterday.
The Straits Times Index (STI) started the day 0.4 per cent lower and eventually ended at 3,089.90, down 20.95 points or 0.7 per cent.
Most other Asia-Pacific markets followed suit, with indices in Australia, Japan, Hong Kong, Malaysia and South Korea all declining.
China bucked the trend with the Shanghai Composite Index up 0.4 per cent on the back of banks and real estate firms.
Following news on Monday that the US will impose commercial restrictions on 28 Chinese entities due to the "repression" of Muslims in China's Xinjiang province, Beijing has said it will retaliate.
The fact that the restrictions were placed on government agencies and some artificial intelligence firms suggests the re-emergence of a tech front to the trade dispute. "Even if the trade war does not develop into a full-blown tech war, increased 'tech tension' is creating a market environment of heightened risk velocity," said Principal Global Investors chief strategist Seema Shah.
The issues got thornier after Washington said it would curb visas for Chinese officials, and word that discussions around restricting capital flows into China have resumed.
AxiTrader Asia-Pacific market strategist Stephen Innes said "it is difficult to see how any progress is going to be made in trade talks, which suggest equity markets should struggle against that backdrop".
Trading volume here came in at 899.66 million shares worth $936.54 million with losers beating gainers 207 to 156.
Golden Agri-Resources remained the STI's most active counter with 68.7 million shares traded as it dipped 2.3 per cent to 21 cents.
The banks also fell. DBS Bank fell 0.7 per cent to $24.60, OCBC Bank lost 0.7 per cent to $10.61 and UOB declined 0.7 per cent to $25.36.
News that public transport costs are expected to rise by 7 per cent from Dec 28 sent rail and bus firm SBS Transit up 1 per cent to $4.09. However, parent ComfortDelGro dipped 0.8 per cent to $2.40.
Citi Research and DBS Group Research noted that fare hikes could be offset by challenges at its taxi arm, which continues to contract.
Among second-liners, Penguin International added 3.2 per cent to 64 cents after UOB Kay Hian initiated coverage with a "buy" recommendation at a target price of 85 cents.