NZ shares fall led by Trade Me

New Zealand shares fell, led lower by Trade Me Group and Fisher & Paykel Healthcare Corp while Warehouse Group gained.

The S&P/NZX 50 Index dropped 27.33 points, or 0.4 per cent, to 7,067.05. Within the index, 23 stocks fell, 18 rose and nine were unchanged. Turnover was $129 million.

"We're on the cusp of reporting season, it really gets going next week so given the New Zealand market has had a pretty strong start to the year, it's probably a bit of caution creeping in," said Mark Lister, head of private wealth research at Craigs Investment Partners. "People will want to see evidence of these companies living up to what their share prices are suggesting they should deliver, the good performance we've seen over the past five or six weeks probably sets the bar a bit higher, so maybe there's a bit of positioning."

Trade Me led the index lower, down 4.1 per cent to $4.95. The online marketplace today said it would provide buyers with refunds if goods bought using its platform weren't as described or didn't show up.

"Maybe that's driving a bit of weakness in the stock - it's obviously good for their customers, but it potentially could add to their costs if they're obliged to provide refunds when trades go wrong," Lister said. "I suspect that might be weighing on the share price a little, they've had a good run of late so not surprising they've had a bit of weakness."

Reserve Bank governor Graeme Wheeler announced that he will step down when his term ends in September, with deputy governor Grant Spencer to fill in until March 2018 when a new governor will be appointed. This was announced as the Reserve Bank released its quarterly survey of expectations, which showed inflation expectations for the next two years have increased, likely adding to the view that the central bank may lift its projected track for interest rates in Thursday's monetary policy statement.

"Long story short, that points to a bit of inflationary pressure starting to emerge from companies, and if you get more inflation you get potentially a bit of upward pressure on interest rates, so the New Zealand dollar has had a strong day on that news and has probably taken some of the heat out of our stocks as well - Fisher & Paykel Healthcare, Xero, Ebos," Lister said. "All of those stocks have an element of non-New Zealand earnings, so maybe that's playing a part in their softness today."

Fisher & Paykel dropped 2.6 per cent to $8.77, Xero fell 1.6 per cent to $19, and Ebos declined 1.1 per cent to $17.30.

Spark New Zealand was unchanged at $3.58, while TeamTalk jumped 66.7 per cent to 75 cents. The ailing minnow network has attracted a $22.7mn takeover from Spark at 80 cents per share, a premium to the 45 cents price the stock traded at prior to the announcement. The deal would bundle fibre in Wellington and a wireless rural internet service provider into the country's biggest telecommunications company.

Warehouse Group was the best performer, up 2.3 per cent to $2.65. Vector gained 1.9 per cent to $3.29 and Restaurant Brands rose 1.9 per cent to $5.49.

Kathmandu Holdings gained 1.1 per cent to $1.92. The Christchurch-based outdoor equipment chain said first-half profit was slightly higher from a year earlier at $9.9m, partly bolstered by solid same-store sales growth.

Contact Energy rose 0.2 per cent to $4.79. It plans to sell $75m of unsecured, unsubordinated five-year bonds to institutional and retail investors, with oversubscriptions of up to $25m.

Outside the benchmark index, Intueri Education Group declined 6.7 per cent to 1.4 cents. Harbour Asset Management has sold down its stake, ceasing to be a substantial shareholder following the company's disclosure on Friday that it will exit Australia after losing government subsidies and is considering bids for its assets while it undergoes a detailed strategic review.