Vietnam Insight

US Treasury yields surged as oil prices climbed. US stock futures held steady on Tuesday after the major averages started the week on a sour note, with investors awaiting another round of corporate earnings. Companies scheduled to report results on Tuesday include Charles Schwab, Chubb, Danaher, General Motors, and 3M. Market participants are also looking ahead to earnings later this week from major technology firms, including Alphabet, Tesla, and Intel. In Monday's regular session, the Dow declined 0.59%, the S&P 500 slipped 0.19%, and the Nasdaq Composite edged down 0.05%. Eight of the 11 S&P sectors ended in negative territory, with healthcare, materials, and industrials leading the losses. Equities came under pressure as Treasury yields jumped on surging oil prices which reignited concerns about inflation and Federal Reserve rate hikes this year. Markets now see around a 55% chance of a Fed rate increase in September, up from 51% a day before.

Short-term correction with expected technical rebound. The VN-Index closed at 1,743.51, down 43.94 points (-2.46%), while trading liquidity increased sharply compared with the previous session. Market breadth remained weak, with 45 stocks advancing and 296 declining. The main positive contributors to the index were LPB, VJC, and SAB, while VCB, VHM, and BID exerted the largest negative impact.Foreign investors recorded net selling of VND44.5bn, primarily in VCB and STB, while posting net purchases in MWG, VIC, and VNM.

Trading Strategy: Investors may focus on stocks with sideways accumulation patterns and strong earnings growth. Gradual accumulation of deeply discounted stocks is a more suitable strategy than short-term trading while the broader market remains in a downtrend. Investors should limit the use of margin and avoid bottom-fishing until there are clear signs that the downward trend has stabilized.

Current portfolio: MBB; Sell Recommendation: MBB

Watchlist: HPG, POW, REE