SINGAPORE - Regional markets started the week on a dour note after data was released on Monday showing a continued contraction in China's manufacturing sector.
The local benchmark Straits Times Index fell 23.94 points, or 0.8 per cent, to 2,974.41.
Other regional bourses fared worse. Hong Kong dropped 1.2 per cent, Shanghai lost 1.7 per cent and Tokyo plunged 2.1 per cent.
DBS Bank chief investment officer Lim Say Boon said in a note on Monday that nervousness over whether the United States Federal Reserve will raise interest rates in December is adding to the market volatility.
"Over recent weeks, markets dismissed the US Federal Reserve's nerve. They have seen the Fed blink on rates again and again. And they have taken to straight-line projection - that the Fed will blink again," he said.
However, that assumption was shaken last week when the Fed issued signals that analysts have interpreted to mean it could raise rates this year, instead of next year as many had previously expected.
"The market's mood swings are becoming more frequent - expect another one over the coming few weeks. Stocks will struggle, the US dollar will likely continue higher, gold will continue lower. In short, the market will fear the Fed again," Mr Lim added.