Tokyo stocks bounced back sharply Thursday thanks to a de-escalation of U.S.-Iran tensions.

The Nikkei average of 225 selected issues on the Tokyo Stock Exchange surged 535.11 points, or 2.31 percent, to end at 23,739.87. On Wednesday, the key market gauge shed 370.96 points.

The Topix index of all TSE first-section issues closed up 27.65 points, or 1.63 percent, at 1,729.05 after falling 23.65 points the previous day.

Tokyo’s market applauded rises in all three major U.S. equity price indicators Wednesday and the yen’s weakening against the dollar on the back of receding concerns over the Middle East, brokers said.

Iranian Foreign Minister Javad Zarif denied on Twitter Wednesday that his country wants to wage war.

U.S. President Donald Trump also signaled in a closely watched speech the same day that his country will back away from further military action.

The strength of other Asian markets Thursday also supported Tokyo stocks throughout the day, they added.

Market sources noted that investors welcomed the two nations’ stances of avoiding further military action.

Maki Sawada, vice president of Nomura Securities Co.’s Investment Research & Investor Services Department, said market sentiment was also brightened by better-than-expected U.S. employment data for December released by Automatic Data Processing Inc. on Wednesday.

“The Nikkei average may hit 24,000,” with the U.S.-Iran strife apparently settling down, said Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc.

In the meantime, Sawada pointed to the need to wait and see further developments as Tehran is expected to retaliate against Trump’s plans to impose additional economic sanctions on Iran.

On the TSE’s first section, rising issues overwhelmed falling ones 1,960 to 157, while 43 issues were unchanged. Volume fell to 1.146 billion shares from 1.453 billion shares Wednesday.

Export-oriented issues, including automaker Toyota and chipmaking gear manufacturer Tokyo Electron, attracted buying thanks to the overnight rise in U.S. stocks and the weaker yen.

Terumo jumped 3.07 percent after Mitsubishi UFJ Morgan Stanley Securities Co. raised its target price for the medical equipment maker.

Among other major winners were technology investor SoftBank Group and technology firm Fujifilm Holdings.

On the other hand, Inpex, Idemitsu and other oil names dropped, pressured by profit-taking after an overnight fall in crude oil prices.

Drugstore chain Welcia Holdings fell 2.56 percent after the company held its operating profit outlook steady for the year to February, drawing dismay from investors who had expected an upward revision.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average advanced 550 points to end at 23,700.