Jitters on Wall Street stemming from the uncertain economic outlook in the United States and mounting tensions in the trade war with China gave local investors further reason to stay their hand yesterday.
The wary mood left the Straits Times Index (STI) at 3,143 points, down 20.28 points or 0.6 per cent on volumes of 1.25 billion shares worth $1.07 billion.
Losers outpaced gainers 207 to 146 with 21 of 30 components ending in the red.
Elsewhere, Australia, China, Hong Kong and Japan posted losses while Malaysia and South Korea finished higher.
The already fragile investor sentiment was further shaken by a growing sense that China could use rare-earth metals as a countermeasure to US tariffs.
Market participants were also concerned by implications of Singapore being placed on the US currency watch list.
Mr Brandon Leu, vice-president of equities and financial products at UOB Kay Hian, said: "Investors seem to be retreating from cyclical sectors such as banking and property, and turning to defensive sectors such as telecommunications and transportation."
Singtel was the benchmark index's most traded stock, with 38.5 million shares changing hands. The telco built on Wednesday's gains to add 0.6 per cent to $3.20.
Transport operator ComfortDelGro advanced 1.2 per cent to $2.47.
The local banks did the STI no favours again yesterday.
DBS Bank ended 1 per cent lower at $24.60, OCBC Bank fell 1.4 per cent to $10.74 while UOB closed at $23.89, down 0.9 per cent.
Dairy Farm International dropped 2.4 per cent to US$7.64.
RHB Research Institute, which has a target price of US$8.25, downgraded its recommendation on the pan-Asian retailer to "neutral" yesterday as the stock was trading close to its fair value.
Oanda senior market analyst Jeffrey Halley said: "With sentiment quite fragile at the moment, lower gross domestic product or higher jobless claims (in the US) could spark another rush to the exit door for equities and oil... A better (set of data) is likely to consolidate rather than turn the tide of the recent sell-off."
One trader was hopeful that the local market would end the month positively, saying a rebound is possible.
Another trader noted that the Singapore market was "somewhat oversold" and that it could rebound "on end-of-month window dressing activity".