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.

Markets hate uncertainty. While the fall of Kabul may seem of limited importance to investors, it does cloud the global geo-political outlook in ways that could turn out to be significant.

Meanwhile, it’s a big fortnight for the world’s most important central bank, the Federal Reserve and what can investors expect from Elon Musk on Tesla’s upcoming AI day?

What’s happening in Afghanistan?

What does the return of the Taliban mean? First, it makes the world feel unsafe again. The potential for Afghanistan to become a safe haven for terrorists once more is destabilising. Second, it is a blow to President Joe Biden’s credibility. It may restrict his power to push through his economic programme if his standing is undermined. Third, America’s inability to tame a small and militarily insignificant country underscores its waning influence. So, this is more than just a worrying humanitarian situation.

Central banks

This week, minutes of the recent rate-setting meeting will shine light on tightening plans. Fed Chair Jay Powell remains dovish. Others, including his deputy Richard Clarida, are less so. Next week, the annual central bankers’ get together in Jackson Hole, Wyoming is expected to provide further guidance on the Fed’s thinking about inflation, growth and monetary policy. The 10-year Treasury yield is back below 1.3%, suggesting investors are more worried about growth than rising prices.

Economic data

In the US, the focus is on the delta variant and how that’s impacting retail sales. Expect little or no growth when figures are published on Thursday. Here in the UK, we have employment, inflation and retail sales data to consider. The big number so far this week has been China’s disappointing industrial production and retail sales data. Both emerged well below both June’s numbers and analysts’ forecasts.

Corporate earnings

Figures from a clutch of US retailers (Macy’s, Lowe’s, Home Depot, Walmart, Target, TK Maxx) will pretty much bring second quarter earnings season to an end. It’s been spectacular. US earnings are 90% higher than a year ago. Here in Europe, results have been 11% better than expected too. Growth estimates for the rest of the year are lower, but still encouraging - up 28% and 20% for the next two quarters in America.

Market outlook

Better than expected earnings have pushed shares on both sides of the Atlantic to new highs. Strategists are tweaking their forecasts for the next 12 months higher as a result. The average expectation for the S&P 500 in a year’s time is close to 5,000, up 11% from here. Valuations remain no higher than they were a year ago thanks to rising profits, at about 21 times expected earnings. High but not excessive.

Tesla’s AI day

Tesla is scheduled to host its AI - that’s ‘Artificial Intelligence’ day on Thursday, 19 August, widely expected to give investors and Musk followers some more insights into Tesla’s plans for getting its electric cars ‘smarter’ with AI-focused tech.

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. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. 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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