UK consumer confidence has improved this month, as falling inflation helps households, in an encouraging sign ahead of next week’s budget.

S&P Global’s Consumer Sentiment Index (CSI) has risen this month, closer to July’s 37-month high

The CSI hit 47.3 in October, up from 46.0 in September. That’s the second-highest reading in over three years, exceeded only by July’s post-general election bounce.

Maryam Baluch, economist at S&P Global Market Intelligence, says:

“Consumer confidence is showing signs of reviving again after being hit by gloomy talk surrounding the Budget, which pulled sentiment off the recent post-election high seen in July.

Confidence is being supported first and foremost by the strong labour market, with the survey showing both job security and income from employment improving at some of the fastest rates seen since data were first collected in 2009. An easing of inflation worries, combined with expectations of a further lowering of interest rates, has also helped allay worries over the cost of living.

Households remain cautious in their spending, and report a further fall in savings to underscore how – despite both now heading lower – inflation and interest rates continue to squeeze household finances. However, attitudes towards making major purchases, such as cars or large domestic appliances, which is a good indicator of overall consumer spending, is running at one of the highest levels seen over the past three years, in a further sign of better things to come.”

German carmaker Volkswagen’s financial services arm has been fined by UK competition regulators for mistreating customers in financial difficulties.

The Financial Conduct Authority (FCA) has fined Volkswagen Financial Services (UK) Limited £5,397,600 for failing to treat its over 100,000 customers in financial difficulty fairly.

VWFS has agreed to pay over £21.5m in redress to around 110,000 customers who may have suffered harm because of its failings.

VWFS is one of the UK’s largest motor finance providers, and provides a range of products to help customers buy several well-known motor brands, including Volkswagen, Skoda and Porsche.

The FCA has found that it failed to treat customers in financial difficulty fairly and communicate information to them in a clear and fair way, if they fell behind on their repayments.

The FCA says:

This included in some instances (a) exacerbating stress and anxiety for customers who were already struggling with their mental well-being; (b) failing to understand individual customer circumstances resulting in cars being taken away from customers, some of whom used their cars for work; (c) further distress and upset caused to vulnerable customers who may have felt unsupported and unheard; and (d) forgoing other priority payments due to demands to pay arrears on car finance.

The FCA’s ruling cites one customer who fell into arrears, and explained their complex and worsening physical and mental health difficulties to VWFS. They received no empathy, but were “sarcastically” reminded how many days are in a month by VWFS’s agents, the FCS says.

In a second case, a customer took out car finance but later could not afford the repayments. They were told it would cost them £20,000 to give the car back.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, says:

“For many, a car is not a nice to have but a necessity for work or for family life.

Volkswagen Finance made tough personal situations worse by failing to consider what those in difficulty might need. It is right it compensates those who suffered. This fine and redress should send clear signals to lenders that they need to properly support those in financial difficulty.”

Gold is continuing to rally, and has hit a new alltime high early this morning.

The spot price of gold is up 0.4%, or around $10 per ounce, to $2,732.73 per ounce, meaning it has now risen by over 32% during 2024.

Analysts say the conflict in the Middle East, and uncertainty over the US presidential election, are pushing investors into safe haven assets such as gold.

Expectations of further interest rate cuts from major central banks are also supporting the price of gold (which doesn’t pay a yield to investors).

Ricardo Evangelista, senior analyst at ActivTrades, explains that several factors are pushing up the gold price, including the possibility that Donald Trump wins next month’s presidential election:

“Geopolitical instability, sluggish economic growth in key regions, a shift in central bank policies towards lower interest rates, and most recently, uncertainty surrounding the U.S. presidential election have all contributed.”

“Rumours that Donald Trump may be on the verge of winning the election have further fuelled demand for gold, driving it to historical highs. Faced with the possibility of a second term for the Republican candidate, markets are turning to gold, the ultimate safe-haven asset.”

The head of oil giant Saudi Aramco has declared that his company is fairly bullish on China and oil demand, especially following Beijing’s stimulus package.

Speaking on the sidelines of the Singapore International Energy Week conference, Aramco CEO Amin Nasser said:

“We see more demand for jet fuel and naphtha especially for crude-to-chemical projects.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Banks in China have cut borrowing costs in the latest attempt to stimuluate growth across the Chinese economy.

The People’s Bank of China (PBoC) has announced today that its two benchmark lending rates are being cut, by a quarter of one percent.

China’s one-year loan prime rate – a reference for loans to businesses and consumers – has fallen to 3.1% from 3.35%.

The five-year LPR – the benchmark for mortgages – has been cut from 3.85% to 3.6%.

The LPR rates are set by a group of China’s major banks, and today’s reductions show they are passing on last month’s interest rate cut from the PBOC.

Becky Liu, head of China macro strategy at Standard Chartered says:

“The larger cuts confirm the PBOC’s stance of easing monetary policy more quickly, and echo the Politburo’s statement of cutting rates more forcefully.”

Some stocks rallied after the cuts were announced, with the Shenzhen SE Composite index gaining around 1.4% today.

Stephen Innes, managing partner at SPI Asset Management, says:

Sure, the rate cut wasn’t a shocker, but the market is banking on the idea that the combined impact of all these recent measures could at least stem the economic bleeding.

However, the reality seems to be that the Chinese Communist Party is desperately trying to harness the wealth effect from local equities to keep morale high. It’s a classic case of “hope floats” until the actual economic recovery kicks in—whenever that might be. Just look at Friday when Xi Jinping sent PBoC Governor Pan Gongsheng to pump some life into the markets with a pep talk, and guess what? It worked.

Mainland and Hong Kong-listed stocks surged, the kind of response Beijing was banking on.

It’s the latest in a flurry of attempt to stimulate the world’s second-largest economy, after growth slowed to an 18-month low last week. Last month, China announced wide-ranging measures including interest rate cuts and more liquidity for the banking system.

Beijing is attempting a difficult balancing act – trying to revive growth while also implementing structural reforms, and managing financial stability risk.

China’s property sector remains in a slump, with sales down sharply this year despite efforts to boost sentiment.

And while cutting lending rates may provide some help, it will be difficult unless Chinese consumers feel confident enough to borrow – at a time where consumer confidence is near an all-time low….

The agenda