Gold's Plunge of 10% Drags Stocks on Merger Monday

Nichole Harper
15 Apr, 2013
New York City

Financial markets declined following losses in commodities after China reported slower than expected growth. Gold and silver plunged 10% and crude oil declined 3%. Dish Network made an unsolicited offer to buy Sprint. Thermo Fisher agreed to buy Life Technologies for $13.6 billion.

[R]12:20 PM New York – Financial markets declined following losses in commodities after China reported slower than expected growth. Gold and silver plunged 10% and crude oil declined 3%. Dish Network made an unsolicited offer to buy Sprint. Thermo Fisher agreed to buy Life Technologies for $13.6 billion.[/R]

Financial markets declined following sharp declines in precious metals prices after China reported slower economic growth.

Chinese economic growth in the first quarter to March declined to 7.7% from the December quarter growth of 7.9% when the economy expanded after falling for seven quarters of decline.

For 2012, the economic growth eased to 7.8%, weakest since 1999 as the government clamps down on loan growth and engineers soft landing. China has targeted for the current year economic growth of 7.5% for the current year.

Gold plunged 7% or $104.80 an ounce to $1,334.31 after China reported slower than expected growth and also retail sales, fixed asset investment and industrial production growths declined. Silver dropped 10% to $23.10 an ounce.

Gold is down now 30% from its peak of $1,920 an ounce reached in September 2011.

The weakness in gold and silver also spilled over in the base metal trading and aluminum, copper and zinc declined more than 3%. Immediate futures of oil declined 3% to $100.27 a barrel.

On the merger front, Dish Network Corporation ((DISH)) plunged 7% or $2.63 to $35 after the pay-television service provider made an unsolicited bid for Sprint Nextel Corporation ((S)) for total consideration of $25.5 billion consisting $17.3 billion in cash and $8.2 billion in stock.

Shareholders of Sprint will receive $7 a share based upon Dish''s closing price of April 12. The cash portion of proposal represents an 18% premium over the $4.03 a share implied by the Japan based Softbank.

Thermo Fisher Scientific Inc ((TMO)) jumped 2.5% or $2.01 to $81.61 after the laboratory equipments maker plans to buy genetic testing equipment maker Life Technologies Corp for $13.6 billion.

Markets in Europe and Asia declined on the rising worries of slower economic growth and U.S. Treasury raised concerns that Japan may be trying to devalue the yen that may spark-off region wide currency downward spiral.

The yen rose 1% to 98.08 and the Nikkei fell 1.6% and the Hang Seng Index in Hong Kong decreased 1.4%. The benchmark index in India gained after the latest inflation data showed a decline but still remained at elevated level.

Stocks in Review

Citigroup Inc. ((C)) climbed 2.4% or $1.08 to $45.86 after the financial service provider reported total revenue in the first quarter ending in March jumped 6% to $20.5 billion. Net income in the quarter soared 31% to $3.8 billion or $1.23 a diluted share compared to $2.9 billion or 95 cents.

The Charles Schwab Corporation ((SCHW)) slipped 1.1% or 19 cents to $17.09 after the investment company reported total revenue in the first quarter ending in March climbed 8% to $1.29 billion. Net income in the quarter climbed 6% to $206 million or 15 cents a diluted share compared to $195 million or 15 cents.