By Julia Horowitz, CNN Business

Happy Tuesday. A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here.

Amid a big week for US-China trade, a new twist.

The United States has 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.

"This action will ensure that our technologies, fostered in an environment of individual liberty and free enterprise, are not used to repress defenseless minority populations," Commerce Secretary Wilbur Ross said in a statement.

The details: The more than two dozen organizations listed include 20 government and security bureaus in Xinjiang, and eight companies, including Hikvision, one of the world's largest manufacturers of AI-driven video surveillance products, and Meiya Pico, a leading digital forensics firm, per my CNN Business colleague James Griffiths in Hong Kong.

Hikvision — which has previously been accused by US lawmakers of helping China create a "high-tech police state" — suspended trading following the move. Chinese stocks still pushed higher.

In adding the entities to its blacklist, the United States risks complicating the high level trade talks that will take place in Washington later this week. Chinese Vice Premier Liu He arrives on Thursday.

"The move may fuel more tension between the two sides although investors remain hopeful for at least some headway on trade," ING Asia economist Prakash Sakpal wrote in a research note.

Momentum toward a deal had already been muted. "Can something happen? I guess, maybe," President Donald Trump told reporters on Monday. "Who knows? But I think it's probably unlikely. Okay?"

UBS said in a note this week that it expects "only modest progress." The bank said that given recent weakness in economic data, it will keep recommending that clients keep lower proportions of stocks in their portfolios as trade developments play out.

With expectations low, even a small concession could buoy market sentiment. Lukman Otunuga, senior research analyst at currency broker FXTM, said that an interim deal to halt the increase of tariffs on Chinese goods worth $250 billion, which are set to jump to 30% from 25% on October 15, would be "warmly welcomed by investors across the globe."

Hong Kong won't buy the London Stock Exchange

It's over: Hong Kong Exchanges and Clearing has dropped its bid to acquire the London Stock Exchange.

The $39 billion deal, proposed in September, would have created the world's third largest stock exchange, behind only the New York Stock Exchange and the Nasdaq in terms of the value of companies listed.

But the tie-up was always viewed as a long shot. The LSE said the offer was too low, risky and lacked strategic merit. Regulatory hurdles looked significant, and political turmoil in Hong Kong added to questions about potential benefits.

In a statement, Hong Kong Exchanges said it was "disappointed" that it had been unable to engage with LSE management to create a "world-leading market infrastructure group."

With the takeover bid from Hong Kong out of the way, the LSE is free to push ahead on its $27 billion purchase of Refinitiv, the financial data provider.

Market moves: LSE shares fell 5% on Tuesday, while HKEX jumped 2.3%.

Goldman Sachs: Buy the pound vs. the dollar

Goldman Sachs thinks the pound could jump back to $1.30 — and recommends going long on sterling against the US dollar. The pound is currently trading between $1.22 and $1.23.

The bank's call, explained in a note to clients on Monday, is a bet that the United Kingdom is more likely to hold snap elections than crash out of the European Union without a deal to protect trade.

As talks between Downing Street and Brussels break down again, that's a risk. In the event of a no-deal Brexit, the pound could drop to the $1.10 to $1.15 range, Goldman concedes. But the firm thinks the odds of such a scenario are low due to recent restrictions enacted by the UK Parliament.

Damage wouldn't just hit the pound. According to a new report from the UK's Institute for Fiscal Studies, a messy departure would shave 2% to 3% off its UK GDP estimates for the next two to three years.

Up next

Domino's Pizza reports earnings before US markets open. Levi Strauss will follow after the close.

Also today:

  • The US PPI inflation report arrives at 8:30 a.m. ET.
  • Federal Reserve Chair Jerome Powell speaks at 2:30 p.m. ET at the annual meeting of the National Association for Business Economics.

Coming tomorrow: More central bank chatter via the minutes from the September meeting of the Federal Reserve.