New Zealand shares dropped 1.4 per cent with A2 Milk Co and Synlait Milk sold off over competition from Nestle, while Sky Network Television fell on news it likely won't win the broadcasting rights for the 2019 Rugby World Cup.

The S&P/NZX50 Index fell 120.04 points, or 1.4 per cent, to 8,388.08. Within the index, 40 stocks fell, seven rose and three were unchanged. Turnover was $192.3 million.

"The US tipped over very aggressively late, lead by tech stocks which New Zealand doesn't have a massive market to speak of any more, and that selling does set the direction of the day down under," said Matt Goodson, managing director at Salt Funds Management.

A2 Milk dropped 6.5 per cent to $12.94, with $32.7m in turnover. Nestle has confirmed it is "currently launching an A2 product" under its Illuma brand.

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"Today's selling has been very much lead by A2 which always has been volatile ...," Goodson said.

"They're a major company with strong distribution channels and deep pockets ... so it no longer has the market to itself."

Synlait Milk, which has booked gains over the past year in sync with A2, dropped 4.6 per cent to $8.68.

Sky TV was the worst performer, down 7.9 per cent to $2.23. The shares dropped after the company said it may miss out on the broadcast rights for next year's Rugby World Cup, saying it isn't the preferred bidder.

Speculation emerged last year that US internet giant Amazon was moving into sports broadcasting and may start competing for rugby rights, while it has been reported today that Spark New Zealand and TVNZ have made a joint bid and are the preferred bidder.

"It's quite a big reaction really, Sky hasn't always had the Rugby World Cup in the past and it's not that well suited to a pay-TV model, it's perhaps more suited for ads than subscriptions," Goodson said.

Spark fell 1.3 per cent to $3.38. Goodson said the deal as reported wouldn't be material for the telco - "really with Lightbox it would be providing a channel to market for content rather than being a massive content owner."

The best performer was Trustpower, up 2.7 per cent to $5.75, with Chorus gaining 1.3 per cent to $3.94 and Argosy Property advancing 1 per cent to $1.01.

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