Vietnam Insight

WTI crude futures rose above $99 per barrel – narrowing the room for interest rate cuts. US stock futures edged lower on Thursday after the major averages came under heavy selling pressure in the previous session as inflation concerns gripped Wall Street. Oil prices surged again, with Brent futures trading around $110 a barrel following the latest attacks on energy infrastructure across the Middle East as the Iran war dragged on. Markets were also unsettled by hotter-than-expected US PPI data and rising inflation projections from the Federal Reserve, which narrowed the scope for interest rate cuts. Traders now expect the central bank to hold rates steady throughout the year, even as the Fed signaled that one rate reduction remains possible. In regular trading on Wednesday, the Dow fell 1.63% to its lowest level since November, while the S&P 500 and Nasdaq Composite dropped 1.36% and 1.46%, respectively. In corporate news, Micron Technology slid 5% in extended trading despite reporting a sharp increase in quarterly revenue.

Short-term correction. VN-Index ended the trading day at 1,713.83 (+3.54 points,+0.21%), lower liqudidity than the average 20 latest sessions. There were 134 stocks ended in green, 189 ended in red. Stocks that had exerted the most significant downward pressure on the index were STB, TCX and VPX; whereas GAS, BID and CTG contributed positively to the index. Foreign net sold VND 2,604 bn, notably VIC (net sold over VND 1,653 bn), while foreign bought strongly MSN.

Trading Strategy: Investors should avoid fully deploying their buying power until there is greater clarity regarding geopolitical developments in Iran. In the meantime, investors may focus on domestically driven sectors such as public investment, banking, and construction materials. Market corrections caused by indirect cross-margin calls could also create opportunities to accumulate stocks at more attractive valuations. Additionally, investors may consider commodity-related stocks as commodity prices appear to be entering an upward trend (e.g., fertilizers). However, these stocks tend to be highly volatile, so proper risk management is necessary if market conditions change