The market, as measured by the Rabee Securities RSISX USD Index was up 4.4% in June, and up 30.4% for the year.
The market’s technical picture continues to be positive, with the macroeconomic fundamentals discussed here last year supporting the argument that the market’s uptrend will likely remain in force.
However, its upward slope might moderate or go sideways as it consolidates its gains for the year before its next move. Supporting the consolidation thesis is the technical picture of the Rabee Securities RSISX IQD Index (the Iraqi dinar (IQD) version of the Rabee Securities RSISX USD Index) which reflects a multi-month consolidation pattern (second chart below).
The fundamental drivers for the market’s next move would come from the government’s implementation of the 2023 budget following its passage into law at the end of the month. The expansionary budget, as it comes into force, would result in meaningful liquidity injections into the economy as a consequence of the oversized role of the government’s spending in the economy – essentially an efficient direct transmission mechanism of oil revenues into the real economy. Ultimately, these liquidity injections will feed into corporate profits, which in turn, will provide the impetus for the market’s next move.