New Zealand stocks fell as weaker capital spending data in Australia weighed on companies with interests across the Tasman including Fletcher Building, A2 Corp and SkyCity Entertainment Group. Westpac Banking Group and Australian New Zealand Banking Group also fell.
The NZX 50 Index fell 8.862 points, or about 0.2 percent, to 4964.336. Within the index, 16 stocks fell, 19 rose and 15 were unchanged. Fletcher alone made up almost a fifth of the $106 million turnover.
Australia's S&P/ASX 200 Index slipped 0.5 percent in afternoon trade after government figures showed the biggest drop in capital spending since 2009, while Qantas Airlines posted a A$252 million loss and plans to sack 5,000 jobs. New Zealand companies with strong Australian interests were caught in the bad sentiment and sold off.
Fletcher, New Zealand's biggest listed company, fell 2.1 percent to $9.47. A2 Corp, which counts Australia as its largest market, fell 1.1 percent to 94 cents. SkyCity Entertainment Group, which operates casinos in Darwin and Adelaide, slipped 0.3 percent to $3.89.
"If you look at some of our big decliners today they do have quite strong business operations in Australia - that's clearly had an impact," said Peter McIntyre, investment adviser at Craigs Investment Partners. "There's concern over some of the operations, like Fletcher's, with over 50 percent of income out of Australia, any changes in Australia weighs on them."
ANZ Bank fell 1 percent to $34.38 while Westpac slipped 0.9 percent to $36.
"You only have to look at economic growth - we're looking at plus 3.5 percent and Australia's is just plus 2 percent," said McIntyre. "We're expecting a cash rate increase as well and that's probably going to put further pressure on the New Zealand dollar upwards against the Australian dollar."
Air New Zealand, rose 0.9 percent to $1.756 after the government controlled airline said full-year earnings will rise more than 17 percent in contrast to rival Qantas's poor result. ASX-listed Qantas dropped 8.5 percent to A$1.162.
"Qantas slumped to quite a massive loss and is restructuring its business, while on the other side Air New Zealand seems to be a far more nimble operator and been able to produce a higher quality result," said McIntyre.
Fonterra Shareholders' Fund slipped 0.3 percent to $6.20. The fund which carries the rights to dividends from the dairy company fell on news that Fonterra Cooperative was boosting farmgate milk prices 35 cents to a record $8.65 per kilogram of milk solids, while leaving unchanged its forecast dividend payment.
"Every time the payout increases it puts pressure on their margins," said McIntyre.
Clothing chain Hallenstein Glasson led today's gainers, rising 2.7 percent to $3.10, and New Zealand's largest listed retailer Warehouse Group rose 2 percent to $3.53. Outdoor clothing retailer Kathmandu Holdings was unchanged at $3.10, as was jewellery chain Michael Hill International at $1.35.
"There's been some positive research notes out on both Hallenstein and Warehouse, they've been laggards of recent times," said McIntyre. "I think there's been some bargain hunters in there."
Auckland International Airport was unchanged at $3.725, as was Sky Network Television at $6.07. Telecom rose 1.4 percent to $$2.465 while cloud-based accounting software gained 0.4 percent to $40.14.
Outside the benchmark index, Veritas Investments fell 0.7 percent to $1.35. The investment company that owns the Mad Butcher franchise chain said first-half earnings fell 6.8 percent. Delegat's Group, which owns Oyster Bay and Barossa Valley wines, fell 1.3 percent to $3.75 after reporting a drop in UK and European sales.
Hellaby Holdings, the diversified investment company, fell 5.5 percent to $3.10 after it posted a 60 percent rise in first-half profit.