Japanese stocks rebounded Tuesday after a call between Prime Minister Shigeru Ishiba and U.S. President Donald Trump spurred hopes of a tariff deal.

The Nikkei 225 rebounded 6%, ending the day up 6.02%, or 1,876.00 points, at 33,012.58, following a plunge of 7.8% on Monday. The broader Topix closed up 6.26%, or 143.36 points, at 2,432.02.

The jump came amid optimism that Japan might strike a trade deal with the U.S. to avert a 24% levy as the Wednesday deadline approached. Both stock indexes had fallen over 7% since the tariffs were announced on April 2.

"There was a feeling that the market was oversold yesterday, and investors were looking for a catalyst to buy back in,” said Kazuhiro Sasaki, head of research at Phillip Securities japan.

Ishiba’s call with Trump, and U.S. Treasury Secretary Scott Bessent’s subsequent comments that Japan may be a priority in tariff negotiations, have been taken as a sign that "talks are moving in the right direction,” said Sasaki. This is giving investors some security and fueling a rebound in shares.

Exporters like electronics makers contributed most to the Topix’s rise, with the move boosted by the yen’s recent weakness against the dollar. The Japanese currency declined in the previous two sessions and was 0.3% stronger at ¥147.47 per dollar on Tuesday. Hitachi’s shares rose as much as 15%.

Banking stocks also climbed, with the Topix’s banking subindex rising by more than 11%. Mitsubishi UFJ Financial Group gained as much as 13%, the most since Aug. 6, when the market rebounded from a rout triggered by an unforeseen Bank of Japan rate hike. Mizuho Financial Group and Sumitomo Mitsui Financial Group also rose over 11% Tuesday.

Japan’s benchmark 10-year bond yield climbed around 11 basis points to 1.215% as the risk-off mood eased on hopes negotiations might soften the economic blow of tariffs.