Daily Brief – Relief Rally

Relief Rally

Without pouring cold water and stressing that we do hope that the reason for the relief rally that started on Monday evening and saw Bonds and Equities rebounding strongly is well founded, we remain to be convinced given the uncertainties on how the Iran war will be resolved. Given that Oil had spiked up to USD 120 earlier on Monday and POTUS’ glib statement describing the rise in the oil price was merely a glitch, it did seem just a little bit pat when he then pronounced the war against Iran to be won and therefore largely complete. On the back of that and nothing else, markets took heart, decided that Oil would resume its flow and therefore the price would decline and consequently the risk of a major hike in inflation could be dismissed. At the time of writing the Relief Rally remains in place and may the solution to the hostilities be apparent soon and most importantly may it be workable.

GBP/USD 1.3438.

CNY

The internationalisation of the Chinese Renminbi Yuan was fully confirmed as being near the top of the agenda for China when National People’s Congress Deputy Li Yinquan set out the agenda which is, he said, focused on the CNY rather than the decline of the USD nor a challenge to the USA nor to the SWIFT payments system. That internationalisation is explicitly focused on Hong Kong (rather than Shanghai) and will see Beijing add further capital and support to Hong Kong. As ever in the past 125 years, each time that Hong Kong is written off as having had its day, there is a fresh chapter and whether every word of Deputy Li’s statement reported in the South China Morning Post can be taken at face value, this is a very big new milestone for Hong Kong. 

EUR/USD 1.1630.

VW

With profits down 44% to EUR 6.9 billion in 2025, VW is biting the bullet and is planning to axe their workforce by 50,000 jobs by 2030. Geopolitical tensions and trade barriers are understood at this time of uncertainty and Middle East warfare, but more concerning is the final reason from VW for both the performance and the layoffs: increasing competitive pressure from China. Despite this, VW is going all out for the China market which means going head to head with NIO, BYD, and Geely. VW shareholders need to take a deep breath and buckle up.

GBP/AUD 1.8832.

Red Diesel

Those in the farming, forestry, horticulture, marine, and rail sectors will be all too aware of the lower taxed cost-effective fuel source for those essential industries that is Red Diesel which is significantly cheaper than White Diesel. To give you an idea, Red Diesel has cost between 70p and 80p per litre for the past 3 years. On February 27, it cost on average 77.9p whereas yesterday it had shot up to 127p. It will not come as a surprise in these days of rising food prices that home grown agricultural produce and imported foodstuffs that require transportation (all) that food prices are going to take a lurch upwards on the back of much higher Red Diesel.

GBP/EUR 1.1558.

Without You

This day in 1972 in those far off and more innocent days, Harry Nilsson was at Number 1 in the UK singles charts with this Peter Ham and Tom Evans song which 22 years later Mariah Carey was to have a go at. But it was this version of Without You that echoes down the airwaves -still to this day:

No, I can’t forget this evening
Or your face as you were leaving
But I guess that’s just the way the story goes
You always smile but in your eyes your sorrow shows
Yes, it shows

No, I can’t forget tomorrow
When I think of all my sorrows
When I had you there but then I let you go
And now it’s only fair that I should let you know
What you should know

I can’t live, if living is without you
I can’t live, I can’t give any more
Can’t live, if living is without you
I can’t give, I can’t give any more

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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