SINGAPORE (THE BUSINESS TIMES) - Local shares closed lower on Wednesday as investors grappled with worries over the seemingly never-ending surge in Delta cases in many countries and uncertainty on the timeline of the United States Federal Reserve's tightening policy.

The cocktail of concerns sent the key Straits Times Index (STI) down 27.36 points or 0.85 per cent to 3,180.00. The three banks led losses and shaved around 16 index points off the STI.

Turnover came in at 1.31 billion shares worth $1.09 billion with losers beating gainers 265 to 240.

Investors here shrugged off encouraging macro data released by Singapore - gross domestic product rose 14.7 per cent in the second quarter on an annual basis, which led to a significant official upgrade in the growth forecast for this year.

Mr Jeffrey Halley, senior Asia-Pacific market analyst at Oanda, attributed Wednesday's losses to profit-taking, chiefly in banking stocks.

"Singapore's (second quarter) GDP... has caused barely a flutter in the city-state. If anything, it has provoked some profit-taking among Singapore banking stocks, pushing down the STI," he said.

Mr Halley also pointed out that the latest growth data predates the virus lockdowns that have "marred" the third quarter and "will undoubtedly impact those numbers".

Major Asian gauges closed mixed the day ahead of the release of key US inflation data.

China's Shanghai Composite finished marginally higher, Hong Kong's Hang Seng gained 0.2 per cent, Japan rose 0.7 per cent, Malaysia rallied 0.5 per cent, while Australia continued to ignore state lockdowns to add 0.3 per cent.

South Korea fell 0.7 per cent while Taiwan dipped 0.6 per cent.

Some cheer across the region came from US President Joe Biden's massive US$1.2 trillion (S$1.6 trillion) infrastructure spending Bill, which finally passed.