Local investors were wary of making any major moves yesterday, ahead of a key address by US Federal Reserve chairman Jerome Powell.
The market seems to be on hold to await comments on the US economy and various extraordinary Fed stimulus and lending programmes.
Caution and uncertainty combined to send the Straits Times Index (STI) down 15.80 points, or 0.61 per cent, to 2,572.01 on trade of 2.2 billion shares worth $1.6 billion. Losers pipped gainers 227 to 210.
Trading in Singapore Airlines rights for its mandatory convertible bonds opened at 0.1 cent and hit 1.9 cents before closing at 0.5 cent.
Meanwhile, SIA’s rights traded in a range from 95 cents to $1.11, and settled at 95 cents. SIA closed at $4, down 6.7 per cent.
Only Mapletree Logistics Trust (MLT) will join the MSCI Singapore Index on May 29 after a review.
Four will be deleted – ComfortDelGro, Sats, Sembcorp Industries and Singapore Press Holdings.
These four fell while MLT ended up 2.2 per cent at $1.83.
Mr James Ashley, head of international market strategy in Goldman Sachs’ strategic advisory solutions team, said that investors are seeing a dichotomy between the bullish views in the market and the ongoing output of bad economic data.
He warned that the prospect for recovery may be uneven.
He said: “Investors should be selective on their country exposure.
“It will be a long time to get back to normal and we shouldn’t assume recovery to be linear. Even after the recovery, we are looking at a lower-growth, lower-interest rate and lower-inflation environment.”
Asian markets were mixed. Hong Kong was down 0.27 per cent, having earlier risen 0.31 per cent.
South Korea pared early losses to end nearly 1 per cent higher.
Similarly, Australia reversed course to close 0.35 per cent higher, while Japan fell 0.49 per cent.
Indonesia was the worst regional performer, slipping 0.8 per cent.
But Malaysian stocks jumped 1.3 per cent to their highest level in nearly two weeks as growth in the first quarter beat expectations.
“Markets’ positive take on the recovery, after unprecedented fiscal and monetary stimulus, will be put to the test,” said Mr Alexander Kraemer, head of cross-asset strategy at Commerzbank.
“Market participants await confirmation that the economy will indeed start to return to normalcy” in the second half of the year.
Analysts also pointed to friction between the US and China, which has fanned fears of a new trade war.
• Additional reporting by Agence France-Presse