US inflation data strengthens argument for more Fed rate cuts, Bitcoin smashes through $90,000 and car finance providers shudder on FCA update

“US inflation is proving to be stickier than a toffee apple,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“Inflation rose to 2.6% in October, exactly as predicted which means the argument for the Federal Reserve to make another cut to interest rates isn’t going to go away. The market has an 84.8% probability of a quarter-point rate cut at the next meeting on 18 December.

“Wall Street quietly nudged up after the latest inflation print, with the S&P 500 trading 0.2% higher and the VIX measure of volatility falling by nearly 4% to 14.17.”

Bitcoin

“Just when you thought all the big gains had been made on Bitcoin, along comes another flood of interest in the cryptocurrency, driving it to new record highs.

“It’s now smashed through the $90,000 level to an intraday high of $93,246. That upper level represents a 36% advance since the night before Trump was declared victor of the 2024 US presidential election.

“At this rate, it might have eclipsed $100,000 before the end of the week. Investors should be reminded that cryptocurrency is incredibly high risk and volatile. Three years ago, following a big spike in the price, it subsequently crashed by 45% in just two months. That shows it can go down just as fast as it goes up, and crypto hopefuls need to be acutely aware of the risks.”

Car Finance Providers

“Worries about the car finance scandal costing the industry a significant amount of money dragged down shares in a multitude of stocks. Close Brothers and S&U were in the red as investors fretted about potentially higher bills for compensation than previously expected for car finance commission complaints.

“The FCA has indicated it might extend the time companies have to handle motor finance commission complaints. The longer the window is ‘open’, the greater the chance for consumers to learn they might be eligible for compensation.

“Car dealerships and finance providers are already muddling through one of the most disruptive periods since Covid toppled the automotive supply chain, so further setbacks will be unwelcome. Finance providers recently scrambled to update systems and processes in response to a Court of Appeal’s ruling so they stay on the right side of the law.

“Payouts from finance deals were temporarily halted while the providers worked out the necessary changes around the disclosure of commissions. Many dealerships weren’t able to hand over vehicles bought on credit to customers. That caused traffic jams on the forecourt and left motorists twiddling their thumbs as they waited for their next motor. Many finance providers are now back up and running, offering new deals. Unfortunately for them, the potential problems are not yet in the rear-view mirror.”

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