Vietnam Insight

A Federal Reserve interest rate cut is almost certain. US stock futures were steady on Thursday after another winning session on Wall Street driven by expectations that the Federal Reserve will cut interest rates next week. In Wednesday’s regular session, the Dow jumped 0.86%, while the S&P 500 and Nasdaq Composite rose 0.3% and 0.17%. Sentiment improved after softer-than-expected ADP data showed a surprise 32,000 drop in private payrolls, pushing Fed cut odds close to a certainty. In extended trading, Salesforce climbed 2% after issuing a stronger revenue outlook. Discount retailer Five Below gained nearly 2% on solid quarterly results, while Snowflake sank more than 7% after the AI cloud provider reported earnings losses. Investors now turn their attention to earnings reports from Dollar General, DocuSign and HP, among others, on Thursday.

Testing the upper bound of the 1,600–1,700 sideways range. VNINDEX closed at 1,731.77 (+14.71 points, +0.86%) with liquidity higher than the average of the last 20 sessions. The market had 225 gainers and 101 losers. The stocks that contributed the most to the index's increase were CTG, BID and VCB; the stocks that hindered the market were VIC, VPL and GAS. Foreign investors net bought VND3,439.67 billion. VPL alone was net bought over VND3,400 billion, followed by MBB, VPB and CTG (with net buying around VND200 billion).

Trading Strategy: Investors need to be selective in choosing stocks, as the VNINDEX is being heavily influenced by movements in the VIC group. Medium- and long-term investors can start gradually disbursing into sectors with solid earnings and attractive valuations, such as banking, financial services, and construction materials. Short-term investors can focus on stocks showing improving liquidity and prices, such as utilities, industrial parks, and technology… Based on historical data, the percentage of stocks trading above their MA50 (50-day Moving Average) around the 30-40% range often signals a market bottom. Currently, this index stands at (40% - implying that many stocks have been deeply discounted).