New Zealand shares dipped ahead of major regulatory decisions on domestic banking and fuel markets tomorrow.
The S&P/NZX 50 Index decreased 18.40 points, or 0.2 per cent, to 11,209.87. Within the index, 25 stocks fell, 22 rose, and three were unchanged. Turnover was $152.4 million.
Stocks across Asia were generally weaker as investors continued to fret over whether China and the US will reach a trade agreement before the end of the year. Australia's S&P/ASX 200 Index dropped 1.5 per cent in afternoon trading, while Hong Kong's Hang Seng was down 1.1 per cent and Singapore's Straits Times Index fell 0.7 per cent.
The local market has "continued to hold up remarkably well against significant offshore pressure," said Matt Goodson, managing director at Salt Funds Management.
"After a sharp sell-off the day before, bond yields around the world have rallied very sharply on significant signs of an economic slowdown."
Z Energy led the market lower, down 2.6 per cent at $4.94 on a volume of 441,000 shares, less than its 90-day average of 763,000. The Commerce Commission is due to deliver its final report on fuel market pricing tomorrow. The regulator's draft report suggested fuel retailers may be earning excess returns, a claim the companies rejected.
"The expectation is that the report probably won't be that aggressively negative for them, but we'll just have to wait and see," Goodson said.
Among other transport companies, courier firm Freightways was down 0.7 per cent at $8.13 and global logistics group Mainfreight dipped 0.3 per cent to $41.10, while Air New Zealand was up 0.8 per cent at $2.855. TIL Logistics was unchanged at $1.17.
The other major regulatory announcement is the Reserve Bank's final decision on bank capital requirements. It's proposed lenders retain higher levels of capital.
Australia & New Zealand Banking Group, the dual-listed parent of New Zealand's biggest lender, fell 1.6 per cent to $25.38. Westpac Banking Group declined 0.8 per cent to $25.33. Heartland Group Holdings, which owns the smaller Heartland Bank, rose 1.8 per cent to $1.70.
Goodson said the Reserve Bank would likely stick to its proposals to lift the minimum capital requirements, but allow for a longer transition period.
"If that's the case I wouldn't see too much market impact," he said.
NZX was down 1.6 per cent at $1.22 on an unusually light volume of 27,000 shares, compared to its 235,000 average. Its November operating metrics showed a pick-up in trading volumes and sales in the month. More activity also went through the market, with 57.3 per cent of the value of equity transactions completed through on-market channels.
Gentrack Group rose from a two-and-a-half year low, posting the day's biggest gain. It was up 2.7 per cent at $3.80 on a volume of 265,000 shares, about twice its 123,000 average.
Contact Energy rose 1.3 per cent to $7.19 on a volume of 1 million shares, and Meridian Energy was up 1.5 per cent at $4.89 with 1.4 million shares traded. The power companies and grid operator Transpower yesterday agreed to fast-track an upgrade to the lower South Island grid to reduce any impact of a reduction in production if the Tiwai Point smelter were to close.
Fonterra Shareholders' Fund units rose 0.5 per cent to $4.02 after whole milk powder prices held up at the latest Global Dairy Trade auction, despite a decline in butter and milkfat prices. Fonterra Cooperative Group is due to announce its first-quarter earnings tomorrow.
A2 Milk fell 1.6 per cent to $14.95 and Synlait Milk rose 1 per cent to $9.30.
Spark New Zealand was the most traded stock on a volume of 3.2 million shares, in line with its 3 million average. The shares decreased 0.5 per cent to $4.46.
Of other stocks trading on volumes of more than a million shares, Goodman Property Trust was up 0.2 per cent at $2.155, Kiwi Property Group increased 0.3 per cent to $1.555, Mercury NZ decreased 0.4 per cent to $4.88, Infratil fell 0.8 per cent to $4.85, Auckland International Airport slipped 0.5 per cent to $8.81, Precinct Properties New Zealand rose 1.4 per cent to $1.83, and Fisher & Paykel Healthcare dipped 0.1 per cent to $21.28.
Outside the benchmark index, Hallenstein Glasson Holdings fell 1.2 per cent to $6.40 after it said margins remained under pressure, despite a 7.1 per cent increase in first-quarter sales.