"Share prices rallied in the past year or two on the back of falling interest rates but the rising rates have now created a re-balance amongst stocks, particularly amongst those paying dividends," he said.
"Take Goodman Property Trust, for example – its dividend is now 2.58 per cent. Meridian's is 4.57 per cent. You can now get up to 3 per cent on a five-year bank deposit term.
"People are now getting a higher return at the bank for less risk, and interest rates will continue to go up and provide headwinds," Sullivan said.
Among the leading stocks, Fisher and Paykel Healthcare was down 15c to $31.06; Mainfreight fell $1.90 or 2.11 per cent to $88; Auckland International Airport declined 10c to $7.89; and Summerset Group Holdings decreased 16c to $14.35.
Contact Energy was down 8c to $8.10; Meridian lost 6.5c to $4.925; but Mercury gained 3.5c to $6.17. Meridian Energy has confirmed the suspension of potline 4 at the Tiwai Point aluminium smelter has been extended to January 31 next year.
The leading banks also had a tough day. ANZ Banking Group was down 39c to $29.40, and Westpac Banking Corporation dived $1.72 or 6.31 per cent to $25.53 despite announcing cash earnings or $5.35 billion, up $2.74 or 105 per cent compared with the previous year. The cash earnings were slightly below market expectations.
Westpac New Zealand's cash earnings shot up by 56 per cent to $1.01 billion in the year to September, boosted by a $404m turnaround in asset impairment charges.
The Westpac group is paying a dividend of 60c a share on December 21, and will complete an off-market share buyback worth $35b from mid-November for a month.
ANZ told the market that the Commonwealth Director of Public Prosecutions has dropped legal action concerning the 2015 institutional equity placement and alleged arrangements made between lead managers.
AFT Pharmaceuticals surged 30c or 7.32 per cent to $4.40 after obtaining an important acceptance for its intravenous Maxigesic pain relief medicine from the US Food and Drug Administration. AFT has a licensing agreement with Hikma Pharmaceuticals and will receive milestone payments totalling US$18m ($25m), as well as a profit share from US sales.
ArborGen Holdings rose 1.5c or 5.36 per cent to 29.5c after telling the market it is selling its New Zealand and Australia tree seedlings businesses to Geyser Limited Partnership led by Hugh Fletcher for $22.25m. ArborGen wants to concentrate on the high-growth United States and South America markets.
Other gainers were Skellerup Holdings, rising 11c to $6.34; Hallenstein Glasson up 9c to $7.9; Briscoe Group increasing 7c to $6.99; Serko gaining 10c to $7.90; Scales Corporation adding 7c to $5.43; and Chorus collecting 5c to $6.42.
NZ King Salmon Investments increased 4c or 2.8 per cent to $1.47; Investore rose 4c or 2.13 per cent to $1.92; Evolve Education gained 3c or 3.41 per cent to 91c; and Rakon was up 3c or 1.96 per cent to $1.56.
Synlait Milk was down 12c or 3.33 per cent to $3.48; Restaurant Brands shed 41c or 2.63 per cent to $15.17; Air New Zealand declined 2.5c to $1.645; DGL Group fell 6c or 1.9 per cent to $3.10; and Marsden Maritime Holdings decreased 9c to $6.41.
Meal kit company My Food Bag was down 3c or 2.48 per cent to $1.18, equalling its lowest price since listing at $1.85.
T&G Global is selling and leasing back its 9.56ha Whakatu West site in Hastings to Property for Industry for $79.45m. Property for Industry's share price slipped 1.5c to $2.93, and T&G was up 2c at $3.
Tower, up 0.005c to 64c, will soon be taking over Samoa-based National Pacific Insurance, which also serves Tonga and American Samoa. Tower bought an additional 22 per cent stake for $3.4m to take its holding to 93 per cent, and it will seek to compulsorily acquire the remaining 7 per cent.
