The NBA battle is ostensibly separate from trade talks. But it doesn’t help the already tense environment ahead of high-level discussions in Washington on Thursday.

The scene: Earlier this week, the United States put 28 Chinese entities on a blacklist that effectively bars them from importing American technology over the groups’ alleged role in facilitating human rights abuses in China’s Xinjiang region.

Then, on Tuesday, the Trump administration announced visa restrictions on Chinese officials suspected of being involved such abuses.

The spike in tensions sparked a late session selloff for US stocks on Tuesday:

  • The S&P 500 finished down nearly 1.6%.
  • The Dow dropped 1.2%.

The scare did not carry over to most Asian markets on Wednesday, however.

The fear: “Recent events surrounding US-China ties threaten to raise new points of conflict beyond just trade differences,” said FXTM market analyst Han Tan. “A wider scope in this protracted conflict would only heighten the barriers to a meaningful reconciliation between the world’s two economic powerhouses.”

Risk aversion should continue to be the name of the game. Watch safe haven assets, like gold and the Japanese yen.

A version of this first appeared in the “Before the Bell” newsletter.