Japan stocks rebounded sharply on Tuesday after the Nikkei 225 and the Topix dropped over 12% in the previous session. Other Asia-Pacific markets were also higher.

Japan’s Nikkei 225 — which saw its largest loss in the previous session since the 1987 Black Monday crash — as well as the broad-based Topix gained over 9%.

The Nikkei ended the day up 10.23% at 34,675.46, hitting its largest daily gain since October 2008 and highest ever spike in terms of index points. The Topix finished up 9.3% at 2,434.21.

The rallies in Japan saw both indexes climb back into positive territories for the year so far.

On July 30, the Bank of Japan had raised rates to their highest level since 2008, causing the yen to strengthen to a seven-month high, pressurizing stocks.

Markets globally were also spooked by fears of a U.S. recession stoked by a weaker-than-expected jobs report as well as the unwinding of the yen “carry trade.”

Japan’s heavyweight trading houses rebounded to close at gains of over 5%, with Mitsui up 10.43% and Softbank Group Corp jumping 12.06%.

Other sectors that saw rallies included Japanese automakers and semiconductor suppliers, such as Suzuki Motor and Renesas Electronics, which rose over 17.01% and 19.06% respectively.

The yen weakened 1.4% to trade at 146.15 against the U.S. dollar.

South Korea’s Kospi jumped above 3%, while the small-cap Kosdaq was up more than 5%. The South Korean markets were halted temporarily on Monday after they fell 8%, triggering circuit breakers.

South Korean heavyweight Samsung Electronics rose 2.1%, while chipmaker SK Hynix climbed 4.5%.

Mainland China’s CSI 300 traded flat, while Hong Kong’s Hang Seng index was up 0.9%.

Australia’s S&P/ASX 200 ended up 0.41%.

Oil prices also rose with Brent crude climbing 1.65% to trade at $77.56 per barrel. U.S. West Texas Intermediate crude rose 1.86% to trade at $74.30.

Japan June household spending numbers showed a larger-than-expected fall year over year, dropping 1.4% in real terms. The average monthly income per household was up 3.1% in real terms from the previous year.

Real wages in Japan also grew 1.1% in June compared to a year ago, the first time that wages have risen in 26 months. A strong wage growth offers more room to the Bank of Japan to tighten its monetary policy.

The Reserve Bank of Australia decided to keep its cash rate steady at 4.35% on Tuesday, as expected by economists. The bank noted that inflation had remained above the midpoint of its target for 11 consecutive quarters and that the economic outlook for Australia remained uncertain.

The RBA also slightly upgraded its GDP growth forecast for the year ending December to 1.7% from 1.6% estimated in May. Meanwhile, CPI is now expected to come in lower at 3.0% for the year ending December compared to a prior expectation of 3.8%.

Overnight in the U.S., the 30-stock Dow and the S&P 500 notched their worst sessions since September 2022.

The Dow dropped 1,033.99 points to end 2.6% lower, while the S&P 500 slid 3%. The Nasdaq Composite shed 3.43% ending 15% off its closing high.

—CNBC’s Hakyung Kim, John Melloy and Sarah Min contributed to this report.