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Japanese Shares Rise as Buffett’s Berkshire Hathaway Buys into Trading Firms

August 31, 2020


Japanese shares hit back on Monday, recouping from some sharp losses seen in the previous session, as worries about Prime Minister Shinzo Abe’s resignation were fuelled by speculation that his possible successor may continue his current policies.

The benchmark Nikkei share average jumped 1.95% to 23,329.47 by the midday break, with 216 advancers on the index against 8 decliners.

The Nikkei had closed 1.41% lower on Friday, after falling as much as 2.65%, as Prime Minister Abe’s abrupt resignation for health reasons increased investors’ concerns about future fiscal and monetary stimulus policies.

Some reports out of Japan stated that Chief Cabinet Secretary Yoshihide Suga, a close friend, and ally of Abe, would join the race to succeed him and calmed nerves. A Suga government could extend the fiscal and monetary stimulus that defined the Abe regime.

A slimmed-down leadership contest will likely be around Sept. 13 to Sept. 15.

Meanwhile, The broader Topix gained 1.83% to 1,634.27, with all 33 sector sub-indexes on the Tokyo exchange trading higher.

One of the key factors of a rise in sentiment was a surge in the wholesales index, up 6.06%, after Warren Buffett’s Berkshire Hathaway acquired more than a 5% stake in five Japanese trading firms.

Marubeni jumped more than 12%, Sumitomo Corp climbed 11%, Mitsubishi Corp rose 9.75%, while Mitsui & Co and Itochu Corp added 8.44% and 5.83%, respectively.

Meanwhile, Japan’s factory output rose in July at its fastest pace on record, driven by automobiles and car parts, showing a clear but gradual economic recovery from the COVID-19 pandemic.

Among some other shares, wireless carrier SoftBank Corp fell 3% after parent SoftBank Group Corp said it would sell up to 22% of the telco’s shares, which could slash its holding in the carrier to 40%.

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