Singapore shares fall 0.6% amid rising US-Iran tensions

2019 may have ended positively on optimism over a global economic recovery but investors have since tossed those feelings aside, with confidence in markets shaken since last Friday on rising US-Iran tensions.

CMC Markets market analyst Margaret Yang said: "As a result of the sudden surge in geopolitical tensions, safe havens and crude oil regained traders' favour in a risk-averse environment."

Gold is at a six-year high, the Japanese Yen hit a three-month high and Brent is over US$70 per barrel.

In the local market, CNMC Goldmine added S$0.01 or 3.6 per cent to 28.5 cents with 6.6 million shares traded, eight times its December daily average. Investors also turned to buying Singapore-listed SPDR Gold shares, an exchange-traded fund backed by the yellow metal. Its units added US$2.96 or 2 per cent to US$148.48.

Interest in upstream oil and gas plays also picked up. AusGroup shares jumped 0.6 Singapore cent or 14.6 per cent to 4.7 cents. GSS Energy shares edged up 0.1 Singapore cent or 0.9 per cent to 11.5 cents while Rex International was flat at 20.5 Singapore cents.

With investors turning risk-averse, Singapore's Straits Times Index (STI) closed at 3,218.86, down 19.96 points or 0.6 per cent.

Elsewhere in the Asia-Pacific, Australia, China, Hong Kong, Japan, Malaysia, South Korea and Taiwan all posted losses. Of them, Japan's Nikkei 225 shed 451.76 points or 1.9 per cent to 23,204.86 in its first session of 2020.

In a note to clients, Oanda's Asia-Pacific senior market analyst Jeffrey Halley wrote: "Expect cash to remain king for now, with downward pressure on developed-market sovereign yields to continue."

With fixed-income yields compressed, some turned to real estate investment trusts (Reits), with the iEdge S-Reit 20 Index, which measures the performance of the 20 largest Singapore Reits, adding 1.28 points or 0.1 per cent to 1,458.90.

Among companies in the second line, Creative Technology gained S$0.04 or 1.2 per cent to S$3.43 ahead of the launch of an improved version of the Super X-Fi at CES 2020.

Trading volume in Singapore clocked in at 1.32 billion securities while total turnover came in at S$1.02 billion.

Decliners trumped advancers 277 to 154. Twenty-one of the STI's 30 counters ended in the red.

With the killing of Iranian general Qassem Soleimani sanctioned by US President Donald Trump, Tehran has vowed revenge. Mr Trump has warned that he would act in kind if Iran hits back. He also threatened sanctions on Iraq after its parliament voted in favour of the removal of US troops.

Tensions could escalate but PhillipFutures investment analyst Samuel Siew is of the view that it is likely to be a temporary blip on sentiment and unlikely to be a thorn in the side for global economic recovery.

"Hence, although global indices could be weighed down in the short term due to the emergence of this new geopolitical factor, the economic improvement and the brightened macros are expected to eventually lend support to market confidence," he said.