Investors looking forward to positive quarterly earnings reports had those hopes dashed when Asian markets were rattled yesterday by the Trump administration's plans to impose 10 per cent tariffs on a new list of Chinese imports worth US$200 billion (S$272 billion).
In a morning note, IG market strategist Pan Jingyi said: "The additional tariffs, while not slated for immediate implementation, with a two-month review process scheduled until hearings in late August, do point to the likelihood of eventual materialisation."
How Chinese policymakers respond will be key for future market movements, said CMC Markets Singapore analyst Margaret Yang in a note.
Chinese Commerce Ministry officials have said China will take countermeasures.
But given that in April, China imported only US$133 billion of US merchandise exports over the preceding 12-month period, Ms Yang noted that China "does not have sufficient imports from the US to carry out 'dollar-to-dollar' countermeasures this time".
Regional markets, which started the week mostly with gains, all ended lower yesterday, including the Nikkei 225, Hang Seng, Shanghai Composite, Kospi and ASX 200.
The Hong Kong and Shanghai bourses bore the brunt of the negative sentiment, with the Hang Seng down 1.3 per cent and the Shanghai Composite falling 1.8 per cent.
The benchmark Straits Times Index fared only slightly better, losing 25.75 points, or 0.79 per cent, to 3,249.08. It had fallen by as much as 53.31 points in early trading.
Turnover stood at about 2.24 billion shares worth $1.21 billion. Losers outnumbered gainers 272 to 158. The biggest loser was Golden Agri-Resources, which closed two cents, or 6.9 per cent, down at 27 cents.
On a turnover of 60.2 million shares, offshore and marine company Ezion Holdings remained the most hotly traded stock for a third straight session, dropping 0.4 cent, or 4.5 per cent, to close at 8.5 cents .
Oxley Holdings finished 0.5 cent, or 1.4 per cent, higher at 36 cents.
According to company announcements on Tuesday and yesterday, Oxley executive director and deputy chief executive Eric Low See Ching bought a total of 2.5 million company shares on the open market for $872,803.
The purchases were made after recent property cooling measures sent the developer's stock to its largest one-day drop last Friday, falling in price by 15.9 per cent.