Global recession fears, sparked by a brief inversion of the US 10-year and two-year treasury yield curve, saw regional indices opening sharply lower. The Straits Times Index (STI) recorded a two per cent drop at the open, though it pared early losses to finish at 3,126.09, down 21.51 points or 0.7 per cent.
Australia, Japan and Malaysia also closed lower. China and Hong Kong finished higher, a surprising performance by the latter as mainland investors went bargain hunting.
CMC Markets' analyst Margaret Yang said sentiment turned "extremely bearish" on the yield curve inversion, which is perceived to be a fairly reliable indicator of an upcoming economic recession.
But there might not be reason to panic just yet. Mr Kelvin Tay, regional chief investment officer, UBS Global Wealth Management, noted: "Curve inversions may be a warning sign for recessions, but they're bad timing indicators for selling equities... Unlike trade conflicts, an inverted yield curve by itself has limited economic impact. Instead, its signal about the health of the economy is what matters, and it (the US economy) is not as negative as some investors fear."
Markets were also spooked by other indicators such as disappointing economic data from China, Germany and the Euro zone.
The early morning sell-offs made for a heavy day of trading. In Singapore, trading volume clocked in at 1.28 billion securities, 7 per cent over the daily average in the first seven months of 2019. Total turnover was $1.44 billion, 36 per cent over the January-to-July daily average.
Across the market, decliners trumped advancers 258 to 156. The blue-chip index had 14 of 30 counters closing in the red.
Yangzijiang Shipbuilding plummeted 18 cents or 17.3 per cent lower to 86 cents, a 21/2 year low, after a week-long trading halt was lifted. With 129.3 million shares changing hands, it was the most active on the local bourse.
Financials were the other main laggards. DBS Group Holdings dropped $0.29 or 1.2 per cent to $24.70. The other two local banks fared worse, trading ex-dividend. OCBC Bank fell $0.40 or 3.6 per cent to $10.70, while United Overseas Bank (UOB) closed at $25.15, down $0.75 or 2.9 per cent.
Singtel shares stopped a two-day slide since posting a fall in net profit for the first quarter, adding $0.07 or 2.2 per cent up at $3.23.
With economic data from major economies indicating a slowdown, investors continued to pick up real estate investment trusts .