Asian stock markets rose on Tuesday amid hopes that a weakening U.S. economy will prompt the Federal Reserve to reduce its hawkish tone, while a partial withdrawal of the U.K.’s controversial tax plan also boosted sentiment.

Japan’s Nikkei 225 index jumped 2.8%, while Taiwan’s benchmark index and South Korea’s KOSPI rose more than 2% each. Yield-sensitive Big Tech stocks posted strong gains.

Australia’s ASX 200 index was the best performer of the day, rising nearly 4% after the Reserve Bank met and raised rates by less than expected. The bank signaled that while it will continue to raise the rate, it will also try to strike a balance between tightening monetary policy and sustaining economic growth.

The Australian dollar also fell sharply after the Reserve Bank’s decision, which benefited export-oriented industries such as mining and consumer goods. Australian bank stocks also rose on the prospect of an interest rate hike on loans.

Trading in Asia was down due to a week-long holiday in China and Hong Kong. But the market took a positive cue from Wall Street, which rose strongly the day before.

Weak U.S. manufacturing and construction data boosted hopes that the Fed would cut the pace of interest rate hikes sooner than announced. However, a number of Fed officials have indicated that the central bank intends to risk economic pain to fight inflation.

Nevertheless, the dollar retreated for a fourth session as the 10-year Treasury yield fell from a 12-year peak, easing pressure on risky assets.

Sentiment strengthened after a report from the U.K. withdrew parts of a controversial tax plan that raised widespread concerns about the country’s financial health. The pound index also recovered from a record low reached last month.

But while the Asian market recovered on Tuesday, it is still trading near yearly lows as concerns over the Fed’s hawkish stance and weaker economic growth this year weigh.