New Zealand shares joined a global decline as investors sold off equities when long-term US interest rates fell below shorter-dated debt, a technical signal that may indicate an approaching recession.
Stocks trading near records, such as Meridian Energy and Contact Energy, fell.
The S&P/NZX 50 Index dropped 31.68 points, or 0.3 percent, to 9,519.31. Within the index, 36 stocks fell, eight gained, and six were unchanged. Turnover was quieter than usual at $90.7 million.
Stocks across Asia followed Wall Street lower, with investors spooked when the yield on US 10-year Treasuries fell below its three-month counterpart, traditionally a signal of weak growth expectations. Australia's S&P/ASX 200 Index was down 1.2 percent in afternoon trading, while Hong Kong's Hang Seng dropped 1.8 percent and Singapore's Straits Times Index declined 1.5 percent.
The yield on New Zealand's 10-year government bonds fell to 1.935 percent from 2.008 on Friday.
New Zealand's defensive stocks, which offer investors stable dividend income, have been a beneficiary of the low interest rate environment. Some of those stocks, such as the electricity generator-retailers, came off the boil today. Meridian was down 1 percent at $4.04 on a volume of a million shares. Contact fell 0.6 percent to $6.56 with 1.9 million shares traded.
"We've followed the offshore leads, and are reversing a little bit of Friday's gains," said David Price, a broker at Forsyth Barr. "There's still reasonably good demand for defensive stocks with rates pushing below 2 percent for the first time in the long end."
Of other yield-stocks, Chorus was unchanged at $5.72 on a volume of 841,000 shares, more than its 543,000 three-monthly average. Kiwi Property Group rose 0.7 percent to $1.44 on a volume of 1.3 million, and Genesis Energy gained 1.4 percent to $3 on a volume of 884,000, more than twice its 90-day average.
Australia & New Zealand Banking Group led the benchmark lower, falling 3 percent to $26.51 with a typically small volume of the dual-listed stock traded on the NZX. Westpac Banking Corp fell 2.1 percent to $26.80, also on light volumes, after saying it expects a A$260 million hit to its first-half earnings from customer compensation.
Kathmandu Holdings dropped 2.8 percent to $2.42 on a volume of 57,000, ahead of its first-half result tomorrow. The outdoor equipment chain previously warned of sluggish sales through Christmas and the New Year.
Summerset Group fell 1.7 percent to $1.60 on a smaller volume than usual of 141,000, after buying plots of land in Rangiora and Blenheim for two new villages. The retirement village operator expects to spend more than $250 million developing the sites.
A2 Milk Co fell 0.9 percent to $13.68 with just 249,000 shares traded, about a quarter of its average volume. The milk marketing firm appointed a new head of Greater China today, starting from late April.
Restaurant Brands New Zealand rose 3.3 percent to $9.30 on smaller volume than usual. A partial takeover for 75 percent of the firm at $9.45 a share by Mexico's Finaccess Capital will be scaled after already being declared unconditional. The offer closes tomorrow.
Trade Me Group decreased 0.2 percent to $6.40. The New Zealand Shareholders' Association today told its members it will vote any proxies it holds at next week's special meeting in favour of the $6.45 per share takeover by UK private equity firm Apax Partners.
Spark New Zealand was the most traded stock on a volume of 5.4 million. It rose 2.5 percent to $3.67. Z Energy fell 0.5 percent to $6.22 on a volume of 1 million.
Outside the benchmark index, IkeGPS rose 9.4 percent to 58 cents when the company said annual revenue will rise by 5 percent in the March year after failing to close a large contract. That also meant it missed its fourth-quarter breakeven target.
Veritas Investments was unchanged at 14 cents. Just before trading closed, the company said it's agreed to buy an Auckland suburban bar for $1.5 million plus stock.