Heartland sinks; Markets await US Fed's interest rate call

The S&P/NZX 50 index dropped 57.22 points, or 0.7 percent, to 8,688.37. Within the index 29 stocks fell, 14 gained and seven were unchanged. Turnover was $160.1 million.

Stocks across Asia fell ahead of this week's Federal Reserve policy review, with Singapore's FTSE Straits Times index down 1.8 percent in afternoon trading and Australia's S&P/ASX falling 1 percent. The Fed is expected to raise the federal funds rate a quarter point at the meeting, but investors are weighing up whether the track for future increases will be pared back. The prospect of rising interest rates has dimmed the lustre of equities globally.

"If you're punching into an analyst's model with regards to valuation, interests rates are quite key," said Peter McIntyre, investment adviser at Craigs Investment Partners. "The market's a little bit on edge."

Heartland led the market lower, falling 6.9 percent to $1.35, its lowest close since August 2016. The local lender has dropped 11 percent since the Reserve Bank unveiled plans that would require a significant increase in the capital held by banks. Macquarie analysts estimate Heartland would need to boost its capital holdings by about $1 billion.