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U.S. stocks drifted Monday as investors awaited signals during a pivotal week for global trade. Here are some of the things people in markets are talking about.

Stocks Steady Ahead of Trade Talks

Asian stocks looked set for a mixed day after a muted U.S. session as markets remain hostage to a crucial round of trade talks. The dollar strengthened for an eighth day, and 10-year Treasuries fell. Futures were higher in Japan and Australia, while contracts in China and Hong Kong pointed lower. The S&P 500 Index finished little changed after drifting most of the session. Investors are weighing the prospects for success of this week’s high-level U.S.-China trade talks ahead of a March 1 deadline for higher tariffs, while mulling the likelihood of a U.S. recession and its impact on earnings as reporting season rolls on. The threat of a shutdown in Washington also looms, with political tensions flaring again between Congress and the president. Elsewhere, West Texas Intermediate crude slipped to its lowest close in two weeks, while gold headed for its first drop in three sessions.

Pompeo Nears Huawei Ultimatum  

Secretary of State Michael Pompeo came close to issuing an us-or-them ultimatum to nations buying from Huawei Technology Co., saying in Hungary that contracts with the Chinese networking giant could limit the availability of U.S. equipment. “If that equipment is co-located where we have important American systems, it makes it more difficult for us to partner alongside them,” Pompeo told reporters in Budapest on Monday, when asked what message he would send about Huawei. “We want to make sure we identify the opportunities and the risks with using that equipment. And then they will get to make their decisions.” The Shenzhen, China-based telecoms company has made Hungary a key base in Europe, touting investments of $1.2 billion in the country. The Trump administration, which wants to boost its partnership with Hungary and other central European countries, is warning that nations using Huawei equipment in critical infrastructure could open themselves to security risks.

Warning Signs Are Flashing on RBA Rates

Signs are emerging that a two-year hiring burst that cut Australian unemployment by almost a percentage point is starting to cool. Labor market resilience has been central to the Reserve Bank optimism, but the prospect of slower hiring and a jobless rate drifting higher would make it tougher to maintain its “glass half full” approach. Such a turn would erode the likelihood of faster wage growth and inflation heading back toward the midpoint of the RBA’s 2-3 percent target. Then there’s the general election that’s set to be called by May. In the lead up to recent ballots, business has hunkered down on hiring and investment to await the electorate’s verdict.

Dollar Rally May Find Another Gear 

The dollar’s relentless eight-day rally may find another gear as central banks around the world take heed after the Federal Reserve’s dovish pivot. The greenback has gained every trading day since the Fed’s Jan. 30 decision, when Chairman Jerome Powell said the case for further rate hikes has weakened. The Fed’s shift, after it projected in December that two 2019 rate hikes were likely, inspired other global policy makers to dial back tightening expectations -- including the Reserve Bank of Australia and the Bank of England. As a result, BNP Paribas Asset Management changed course on the dollar, after calling for the currency to weaken over the course of 2019. The $646 billion money manager now expects that the greenback may gain 5 percent in the first half of the year as weakening global growth prevents other central banks from hiking.

Tencent Investment in Reddit Sparks Protests

Reddit Inc. said Monday that it raised $300 million from investors. It was one backer, in particular, that drew condemnation from members of Reddit’s online community. Chinese internet giant Tencent Holdings Ltd. was among the investors in the round, which values the link-sharing website at $3 billion. A report last week by technology website TechCrunch signaled Tencent’s interest. In the following days, users posted links to Reddit depicting imagery banned by Chinese censors. They include photos of the Tiananmen Square protest and pictures comparing President Xi Jinping to the portly Winnie the Pooh. Reddit users swarmed several of the submissions, pushing them to the list of most popular posts.

What we’ve been reading

This is what caught our eye over the last 24 hours.

  • RBNZ tipped as next central bank to turn dovish.
  • Tesla faces heavy lift as Model 3 enters Europe and China. 
  • Cambodia faces ticking clock on European sanctions.
  • The incredible shrinking Singapore stock market.
  • Will collectors want art created by AI? 
  • Investors hedging stock doomsday with record bond inflows.
  • New riffs on classic gifts just in time for Valentine’s Day.

To contact the author of this story: Randall Jensen in New York at rjensen18@bloomberg.net

To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net

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