New Zealand shares fell as investors punished fuel retailer Z Energy and dairy processor Synlait Milk for earnings downgrades.

The S&P/NZX 50 Index was 19.82 points, or 0.2 per cent, lower at 10,905.06. Within the index, 26 stocks fell, 22 rose, and two were unchanged. Turnover was $121.5 million, of which Z accounted for $17.3m and Synlait $5m.

Matt Goodson, managing director at Salt Funds Management, said the market has had a very strong start to September, despite the fact that company earnings haven't matched that optimism.

Z Energy led the market lower after cutting its earnings guidance by $60m, most of which it blamed on "unprecedented" discounting among petrol retailers, coinciding with the Commerce Commission's market study of the sector. The stock slumped 9.8 per cent to an eight-month low $5.68 on a volume of 3 million, more than four times its 90-day average of 619,000. It was the most traded stock today.

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"Z Energy really did surprise. They held an investor day quite recently where there wasn't the slightest hint of trouble and yet came out today and informed the market that the chief thing they're seeing is very sharp price competition and also what appears to be difficulties changing over loyalty schemes," Goodson said.

Synlait was close behind, dropping 9.2 per cent to a three-month low $8.75 on volume of 564,000 shares, well up on its 90,000 daily average. The milk processor lifted annual profit by 10 per cent as revenue cracked a billion dollars for the first time, but disappointed analysts with its 2020 forecast.

"Synlait Milk's result was a little bit below expectations, but their forward guidance appears a reasonable amount below current forecasts," Goodson said.

A2 Milk declined 1.7 per cent to $14.28. Synlait noted A2 had negotiated better prices during the July 2019 financial year. Fonterra Shareholders' Fund units were down 1.9 per cent at $3.17.

Goodson said the increase in global bond yields over the past couple of weeks triggered a rotation in asset allocations, with investors selling stocks offering reliable yields or growth opportunities and buying value.

Fisher & Paykel Healthcare fell 2.3 per cent to $16.51, Vector was down 1.7 per cent at $3.57 and Genesis Energy fell 1.4 per cent to $3.48 with 1 million shares changing hands.

Fletcher Building rose 2 per cent to $5.10 on a volume of 1.8 million shares and Sky Network Television was up 1.8 per cent at $1.14.

Mercury NZ was down 0.6 per cent, or 3 cents, at $5.30 after shedding rights to a 9.3 cent per share dividend on a volume of 1 million shares. Precinct Properties New Zealand, STride Property, Freightways, Vista Group International and Metlifecare all moved lower as they shed dividends.

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Oceania Healthcare was unchanged at $1.02 after saying it received resource consent for the redevelopment of a site in south Auckland.

Contact Energy posted the day's biggest gain, up 2.7 per cent at $8.68 on a volume of 691,000 shares, less than its 986,000 daily average. SkyCity Entertainment Group rose 2 per cent to $4.06 on a volume of 1.2 million shares.

Goodman Property Trust rose 0.7 per cent to $2.23 on a volume of 1.5 million units after buying a mixed-use property in Auckland for $65m. T&G Global sold the property and has signed up to a two-year lease, which can be extended for another two years. The fruit exporter was unchanged at $2.55.

Of other stocks trading on volumes of more than a million shares, Spark New Zealand rose 1.7 per cent to $4.50, Kiwi Property Group decreased 0.3 per cent to $1.665, and Meridian Energy increased 0.2 per cent to $5.09.

Outside the benchmark index, NZME fell 1.2 per cent to a new all-time low of 42 cents. Jarden reiterated its 'neutral' rating on the stock today, and said very poor earnings from rival Stuff may encourage the publishers to revive their attempts for one to buy the other.

Chorus's 2028 bonds paying annual interest of 4.35 per cent were the most traded debt security on a volume of 2 million. The notes closed at a yield of 2.65 per cent, up 10 basis points. Chorus shares rose 0.3 per cent to $5.11.