New Zealand shares dropped, with Synlait Milk, A2 Milk Co and Fonterra Shareholders Fund units falling ahead of tomorrow's GlobalDairyTrade auction and results from Synlait and Fonterra Cooperative Group.

The S&P/NZX50 Index fell 4.97 points, or 0.06 percent, to 8,487.15. Within the index, 27 stocks fell, 17 rose and six were unchanged. Turnover was $129 million.

"The market is pretty flat which is quite a good outcome, because it was a pretty ugly overnight in Europe and the US, so we're holding up and proving reasonably resilient," said Mark Lister, head of private wealth research at Craigs Investment Partners. "Most companies have reported, so there's a bit of a lull, but it will be a pretty busy day tomorrow with the dairy auction and results from Fonterra and Synlait - tomorrow is dairy day."

"The second half of the week is shaping up to be quite busy, which is probably why you're seeing people holding back a little bit at the moment," Lister said. "We've got the OCR review from our Reserve Bank and the Fed Reserve both on Thursday morning, and that second one could have quite an impact on interest rates."


Synlait Milk fell 1.1 percent to $8.09 ahead of its earnings tomorrow. Lister said the result will be closely watched as Synlait has been one of the top performers lately, up 13 percent this year while the benchmark index has been basically flat.

"If there's anything we can learn about what Synlait and A2 are doing that will be interesting, but the market will be more interested in the other growth avenues they have outside of A2, and they do have them," Lister said. "It's probably a deliberate strategy on their part to diversify away, to have a growth strategy in their own right and the market will be looking for more of what they're doing outside of the A2 relationship."

A2 Milk Co fell 2.1 percent to $13.51. Lister said the stock had been trading around the mid $13 range ever since its result in February which pushed the stock to new records, and the market is waiting for another catalyst to push it one way or another.

Fonterra Shareholders Fund units dipped 0.7 percent to $5.83 ahead of Fonterra Cooperative Group's heavily anticipated first-half results tomorrow.

"Obviously the disaster with Beingmate, how far down they will write the value of that holding is of interest," Lister said.

Arvida Group led the index lower, down 2.4 percent to $1.20, while Meridian Energy fell 1.8 percent to $2.93 and Mercury New Zealand dropped 1.7 percent to $3.16.

Kathmandu Holdings was in a trading halt at $2.40. The outdoor equipment retailer increased first-half profit 23 percent, in line with its forecast, as it discounted less products and lifted margins. It also announced plans to buy its US footwear supplier Oboz Footwear, and plans to raise $50 million in a share placement at a 10 percent discount. The shares, which have gained 24 percent over the past year, are halted from trading until tomorrow due to the share placement.

"The result was reasonable, we'll just have to wait and see how that trades when it comes out of its hole," Lister said.