Singapore shares dive nearly 2% at Thursday's open on recession fears

SINGAPORE shares skidded when trading began on Thursday, with the Straits Times Index plunging 1.7 per cent, or 54.85 points to 3,092.75 as at 9am.

By 9.13am, the benchmark index had slipped even further, sinking almost 2 per cent, or more than 60 points.

This comes after Wall Street stocks sold off sharply overnight as recession fears gripped the market. All three major US indexes closed down about 3 per cent on Wednesday, with the blue-chip Dow posting its biggest one-day point drop since October, after two-year Treasury yields surpassed those of 10-year bonds, a widely-viewed US recession warning.

On the Singapore bourse, decliners outnumbered advancers 131 to 18, after about 46 million shares worth S$64 million changed hands.

Among the most heavily traded by volume, YZJ Shipbuilding lost 10.1 per cent, or 10.5 Singapore cents to 93.5 cents, with 8 million shares traded; while ThaiBev gained 1.2 per cent, or one cent to 84 cents, with 2.7 million shares traded.

With the exception of ThaiBev which bucked the trend, it was a sea of red on Thursday morning, with all 30 index stocks recording losses.

Banking stocks were amongst some of the biggest laggards in the early morning trade - DBS lost 1.7 per cent, or 43 Singapore cents to S$24.56, OCBC plunged 4.6 per cent, or 51 cents to S$10.59 on an ex-dividend basis, and UOB declined 3.3 per cent, or 86 cents to S$25.04 also on an ex-dividend basis.

Other active stocks included ST Engineering which fell 2.6 per cent, or 11 Singapore cents to S$4.11 on a cum-dividend basis, and Wilmar International, which dropped 2.1 per cent, or eight cents to S$3.78 on a cum-dividend basis.

Elsewhere, Asian equities slumped to more than two-month lows on Thursday, tracking Wall Street stocks overnight. Japan's Topix fell 1.6 per cent, as at 9.37am and Australia stocks sank 1.9 per cent. Hong Kong's Hang Seng declined 1.4 per cent, and the Shanghai Composite Index lost 1.7 per cent. The MSCI Asia Pacific Index also fell 1.3 per cent, data from Bloomberg shows.

In a research note on Thursday morning, UOB noted that the US yield inversion was the focus for markets overnight, as the US Treasury two-year and 10-year yield spread briefly went negative (-1.7 basis points), sparking fears of an impending US recession, and that the recession signal could add more pressure on the US Federal Reserve to "keep cutting rates" and to "cut more aggressively".

Stephen Innes, managing director at VM Markets, described the US stock slump as a "Washout Wednesday", with the inversion of the 2/10 yield curve triggering a "massive exodus from the equity markets into US bonds".

He added that oil markets plummeted overnight as the US bond markets sounded the recessionary alarm bells, while weak economic data in China and Germany helped to set the tone for higher gold.