Investors should not mistake the recent U.S.-China summit as a durable reset in relations. While it introduced an 'uneasy calm' and made modest progress, it represents a more managed state of affairs rather than a fundamentally stable relationship. The underlying structural competition and potential for policy volatility remain.
The post-summit market rally is not a sign of improved fundamentals in the U.S.-China relationship. Instead, it reflects the reduction of near-term tail risks. This removal of a worst-case scenario is sufficient to support equities, even as long-term structural competition between the two nations persists.