Stocks in Asia are set for a mixed open after investors looked past Donald Trump’s tariff plan to lift the US benchmark to yet another record. President Joe Biden said Israel and Hezbollah reached a cease-fire agreement.

Equities opened higher in Sydney, while futures pointed to a drop in Tokyo and little change in Hong Kong and the US. The S&P 500 rose for a seventh day to notch its 52nd record this year, with gains driven by software companies including Microsoft Corp. that are less susceptible to tariff risk, while automakers fell due to their exposure to Mexico and China.

President-elect Trump’s vow to place an extra 10% tariffs on Chinese imports and 25% levies on all products from Mexico and Canada roiled markets on Tuesday, sending a gauge of emerging markets down 0.5%. The world’s no. 2 economy responded by defending its track record and refrained from mentioning any planned retaliation.

China “is likely to respond cautiously at first to Trump’s threats, until it gets a better sense of the balance between confrontation and deal-making in his second term,” said Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute’s Center for China Analysis.

Biden said Israel reached a cease-fire deal with the Lebanese militant group Hezbollah after weeks of talks mediated by the US. While anticipation of the announcement sent oil lower on Tuesday, crude was little changed early Wednesday after an industry report showed a drop in US stockpiles and traders looked to an OPEC meeting this weekend. 

The S&P 500 rose 0.6%. US 10-year yields advanced three basis points to 4.31%. A dollar gauge gained 0.2%, while the yen was the sole G-10 currency to gain against the greenback in haven trading. The Mexican peso and Canadian dollar slid.

While US stocks gained on Tuesday, the bond market response was mild following its second-biggest advance this year. Federal Reserve officials indicated support for a careful approach to rate cuts, according to minutes from their latest policy meeting. 

That comes as a bearish tone takes hold in the market for interest-rate options, suggesting that traders are bracing for Treasury yields to surge anew in the coming weeks. The wagers are a reminder that even though yields have surrendered the brunt of their post-election advance, investors are well aware of the potential for the so-called Trump trade to gain traction again. 

At BMO Capital Markets, Ian Lyngen says that perhaps the muted response in Treasuries is because not only had the market already priced in a renewed emphasis on “tariffs as trade policy,” but it’s also an acknowledgment that increases in levies have a one-time impact on realized inflation.

Elsewhere, a measure of French bond risk rose to levels last seen during the euro area debt crisis as a political standoff over the country’s budget threatens to bring down the government. The premium investors demand to hold 10-year French government bonds over German bonds surged on Tuesday to end the day above 86 basis points, the highest close since 2012. 

  - Bloomberg