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The Australian sharemarket has had a cautious start to the week as the profit reporting season ramps up. The ASX 200 is down 18pts or 0.28 per cent to 7,002 with losses from mining, energy and banking stocks weighing heavily. The market is in defensive mode, with gold miners the likes of Newcrest (NCM), Evolution (EVN) and Northern Star (NST) lifting strongly. CBA, CSL, TLS and WPL will be just some of the larger companies to post earnings in coming days.

Resource stocks are underperforming as most commodity prices went backwards on Friday. From mid-January, metal and energy prices have fallen by an average 10-15 per cent. There are some expectations that demand could be weak in coming months in China, as the number of factories and construction sites shut in response to the coronavirus.

The price of oil dropped 1.2 per cent to a near 13-month low as some of the world’s largest producers met in Vienna in recent days. Russia said it needed more time before deciding whether a cut to oil output is necessary. Metals including zinc, tin, nickel, copper, lead and aluminium also fell.

Boral (BLD) is down 10.3 per cent and a weight on the market. The building products maker warned that it has had ‘…a very challenging start to the second half in Australia’ partly due to the bushfires and weather related issues. BLD now expects earnings of between $320-$340m for the year; up to $100m below last year’s results. Following a review of its US windows business, BLD also found that finance personnel manipulated accounts to artificially inflate the unit’s profitability. Profits were overstated by US$24.4m over the past 20 months. CSR, Fletcher Building (FBU) and Adelaide Brighton (ABC) are all down today.

Insurers are underperforming following the very heavy rains on the east coast and the Insurance Council declaring the weekend a catastrophe. Over 10,000 claims have been lodged to insurers overnight worth around $45m.

JB Hi-Fi (JBH) is surging by 11 per cent after posting record sales and profits, a bigger dividend and improved outlook in its 1H20 results this morning.

Blackmores (BKL) has entered a trading halt pending an announcement on its first half results and outlook.

1.5bn shares have changed hands so far today worth $2.3bn. 422 stocks are up, 592 down and 369 are unchanged.

Published by CommSec