Regional markets started the week on a dour note after data out yesterday showed 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 yesterday 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 as many had 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.
The weak Chinese manufacturing data led to concerns that demand for commodities will continue to slow, which triggered another drop in commodity prices.
Resource counters were battered at home. Noble Group, one of the top actives yesterday, slipped 2.5 cents to 48 cents; Golden Agri-Resources slid two cents to 37 cents; Indofood Agri edged down a cent to 56 cents; Olam International lost half a cent to $1.995; and Wilmar International dropped seven cents to $3.06.
Banking stocks also ended lower amid the broader market sell-off. DBS Bank gave up two cents to $17.25, OCBC Bank declined eight cents to $8.95 and United Overseas Bank retreated 12 cents to $20.21.
All three lenders reported third-quarter results over the past week. The Singapore Exchange noted in a report yesterday that they averaged a net interest income of $1.46 billion for the three months ended Sept 30, an average increase of 8.6 per cent from the same period a year earlier.
DBS, which reported its results yesterday, posted the best quarterly performance, with a 13 per cent surge in net interest income from the same period a year ago to an all-time high of $1.81 billion.
Neptune Orient Lines fell 3.5 cents to 96 cents, after reporting a core net loss of US$87 million (S$122 million) for the third quarter, more than in the same period a year before, as a sharp drop in freight rates wiped out cost savings.