New Zealand shares traded lower on Tuesday as markets awaited the start of the US Federal Open Market Committee's two-day meeting.

The S&P/NZX 50 Index was down 0.3%, or 32.44 points, to close at 12,671.95.

The Fed is widely expected to reduce its interest rates, with investors pricing in a 67% probability that policymakers will deliver a 50-basis-point cut, according to the CME FedWatch tool. The remaining odds favor a reduction of 25 basis points.

In domestic news, the Reserve Bank of New Zealand said unexpected changes to the official cash rate can have a material impact on financial markets, particularly in the New Zealand dollar trade-weighted index and swap rates.

In corporate news, New Zealand's Financial Markets Authority filed proceedings against a former Heartland Group (NZE:HGH, ASX:HGH) employee over alleged insider trading in the company's shares. The company's shares closed down by about 1%.

Auckland International Airport (ASX:AIA, NZE:AIA) raised NZ$1.2 billion through a fully subscribed placement at an offer price of NZ$6.95 per share. AIA ended the Tuesday trade down 0.4%.