Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

MOVING into November means we’ve successfully navigated the trickiest period of the year for investors. September and October are often when markets wobble. This year they held onto their gains and remain at or close to all-time highs in some cases.

Market performance

The mini market correction in September, which saw the S&P500 fall by 5% over the month, was more than reversed in October despite the long list of things for investors to worry about. The US benchmark closed on Friday 2% higher than it ended August. It was a similar story in Europe and the UK, both of which ended the two-month period roughly where they started it. Only emerging markets - which tend to suffer when US rates rise - are 3% down over the two months as a whole.

Earnings season

One of the key reasons for the market’s relative sanguine performance has been another strong earnings season to date. With 279 S&P500 companies having reported by the end of last week, the forecast year-on-year growth for the third quarter stands at 37% compared with 28% when the results started to be announced. Those improving expectations follow exactly the same pattern as the first two quarters of the year when forecasts were also handily beaten.

Central banks

More than ever, investors are watching the Fed and the Bank of England this week. Speculation is mounting that the UK central bank will be first out of the blocks in the forthcoming tightening cycle with interest rates rising from 0.1% to 0.25% on Thursday. Bank governor Andrew Bailey has given a series of broad hints recently that the cost of borrowing will rise before the end of the year, so if not this week then definitely in December. Over the pond, the focus is on the Federal Reserve’s bond-buying programme. The Fed is currently spending $120bn a month buying bonds but is expected to kickstart a $15bn a month reduction in that programme until it stops completely next summer.

COP26

Climate change may not have short-term market implications, but it will be key longer term. The G20 meeting in Rome at the weekend had a focus on global warming with the world’s biggest economies agreeing to limit international coal power financing but holding back on phasing it out in their domestic markets. They did, however, reference for the first time the 1.5% target cap on average global temperatures compared with pre-industrial levels. That is seen as key to averting climate catastrophe and measures to achieve it will be the main focus at the Glasgow climate summit over the next couple of weeks.

Japan

And finally, the out of favour Japanese stock market received a boost at the weekend when Fumio Kishida, the country’s new Prime Minister secured a bigger than expected victory for his business-friendly Liberal Democratic Party. Markets like the LDP because they think it is likely to push ahead with economic stimulus.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.

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