JAPAN’S Nikkei share average hit a one-month low on Thursday, as worries that the Federal Reserve’s interest rates would stay at elevated levels crimp risk appetite.

The Nikkei was down 1.73 per cent at 31,813.01, its lowest level since Aug 28, by the midday break. The broader Topix slid 1.5 per cent to 2,344.05, a near four-week trough.

“The Nikkei is on track for its third monthly fall in a row as the Fed’s hawkish hold last week took the wind from its sails,” said Tony Sycamore, market analyst at IG.

“The Nikkei has outperformed most of its global peers including American and European Equity indices... Nikkei is approaching the end of its correction from the June high.”

The Nikkei has slipped about 5 per cent since scaling a 33-year peak in June but is still up roughly 23 per cent this year and remains Asia’s best performing stock exchange in 2023 helped by strong foreign inflows.

Data from Ministry of Finance though showed foreign investors sold Japanese shares worth 3 trillion yen (S$27.5 billion) in the week ended Sept 23, a record weekly net selling by foreigners.

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Overnight, the S&P 500 eked out a slim gain after a see-saw session, as investors weighed whether to start bargain hunting following a sell-off fueled by elevated Treasury yields and uncertainty about the path ahead for interest rates.

Japan’s Finance Minister Shunichi Suzuki said the country won’t rule out any options to deal with excessive currency volatility, reiterating a warning against speculative moves on the yen which is struggling near 11-month lows against the dollar.

The dollar/yen hit 149.71 on Wednesday and traded at 149.40 on Thursday in Asia.

Softbank Corp and Matsui Securities fell more than 3 per cent and were the top percentage losers on the Nikkei.

Chugai Pharmaceutical was up 5 per cent, providing the biggest support to the index. REUTERS