Singapore: Stocks open almost 2% down as China and Fed continue to spook

SINGAPORE'S Straits Times Index tumbled 1.85 per cent, or 55.02 points, to 2,915.99 in early Monday trade, on the back of a plunge in New York as worries about China's economy continued to unnerve global financial markets.

At 09.04am, more than 124.7 million shares were traded, with 15 gainers to 242 losers.

Banking stocks continued to lead the losers, with UOB down 22 Singapore cents at S$18.89 a share, DBS down 46 cents at S$17.83 and OCBC down 11 cents at S$8.99.

"We are going to see a fearful Asia today, as risk selling activity is expected to blanket the regional markets. Geopolitical tensions in the Korean peninsula are going to add to the weak sentiments,'' said Bernard Aw, market strategist at IG.

Early on Monday, Bloomberg reported that stock gauges from Japan to Australia sank with US index futures, indicating the rout that sent the Dow Jones Industrial Average into a correction on Friday has further to run.

Mr Aw noted that the the Dow lost around 1,000 points last week.

"The last time the index gave up so much was right after the Lehman Brothers collapse, where it plummeted nearly 1,900 points in the week ending October 10, 2008,'' he said, adding that the recent intensity of the slide has caught many by surprise. "A startled market is seldom a good thing because it rekindles tendencies to exaggerate price action."

The Dow capped a four-day losing streak on Friday by dropping more than 500 points to close at 16,459.75, sinking 10 per cent from its May peak.

Also spooking the stock market was the US Federal Reserve, which has appeared to be heading towards its first interest rate hike since the financial crisis in the fall.