FXI at $36.49 as U.S.-China tensions rise

Investors are already treating U.S.-China relations as a fast-moving risk event rather than a slow-burn policy issue. Adalytica’s U.S.-China Relations Sentiment gauge shows “Extreme Fear” at 4, with awareness at 96, underscoring how closely markets are tracking every new sign of escalation.

That fear is showing up in China-exposed ETFs and in the broader risk tape. The iShares China Large-Cap ETF, FXI, has rebounded to $36.49 from a recent low near $34.13, but it remains below its 200-day moving average of $36.86 and is still just under the 50-day average of $34.32, a sign the rally is fragile even as momentum improves. The fund’s RSI reading of 77.4 points to stretched near-term buying.

The Hong Kong tracker EWH is in a similar position. It closed at $22.80, above both its 50-day average of $21.92 and 200-day average of $22.21, but its gains have come in a market still shaped by policy headlines rather than conviction about earnings or trade normalization.

For companies with China exposure, the policy backdrop remains more important than near-term fundamentals. Meta has disclosed that a small group of resellers serving China-based advertisers generates meaningful revenue, while Apple has warned tariffs and other measures can hurt business through supply chains and component access. Those kinds of links are exactly why a communications-led China strategy matters to investors: it can influence ad spending, export flows, platform access and procurement decisions without waiting for new tariffs to be announced.

The broader market backdrop is also unusual. Adalytica’s global stability gauge sits at 96, and the dollar signals are flashing “Extreme Greed,” suggesting investors are simultaneously pricing in geopolitical stress and refuge demand for the greenback. That combination often benefits U.S. assets relative to China-linked risk, but it also raises the cost of capital for emerging-market and trade-sensitive businesses.

The key question now is whether Washington uses communications pressure as a supplement to tariffs and export controls, or as a substitute for them. If the former, China-facing assets could see more volatility; if the latter, markets may get brief relief, but only until the next policy move lands.