Key Momentum Shifts

  • Communication Services (XSJ) has entered the Leading quadrant, joining Utilities (XUJ) as one of the Australian market's strongest relative performers, confirming improving relative strength and momentum.
  • Energy (XEJ) has rotated into the Weakening quadrant, signalling that while the sector continues to outperform on a relative basis, its momentum has begun to deteriorate.
  • Utilities (XUJ) remain firmly established in the Leading quadrant, reinforcing continued investor preference for defensive, income-generating stocks.
  • Telecommunication Services (XTJ), Materials (XMJ), Real Estate (XJR), Consumer Discretionary (XPJ), and Industrials (XNJ) continue strengthening within the Improving quadrant, highlighting sustained momentum across several cyclical sectors.
  • Financials (XFJ) remain in the Weakening quadrant, indicating institutional investors continue to become more selective towards financial stocks.
  • Information Technology (XIJ), Health Care (XHJ), and Consumer Staples (XDJ) remain in the Lagging quadrant, reflecting persistent relative underperformance.
  • Sector rotation continues to broaden, with leadership gradually shifting towards Communication Services while Energy begins to lose momentum.

The latest Relative Rotation Graph (RRG) for 4 August 2026 shows continued evolution in Australian sector leadership. Communication Services has successfully rotated into the Leading quadrant alongside Utilities, while Energy has transitioned into Weakening after an extended period of market leadership. At the same time, several cyclical sectors remain firmly positioned within Improving, suggesting relative momentum continues to build across broader areas of the market. Overall, sector rotation remains constructive, although leadership is beginning to diversify.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 04/08/2026). Powered by: amibroker.com.

Leading Quadrant

  • Utilities (XUJ) remain firmly positioned within the Leading quadrant, continuing to exhibit strong relative strength and positive momentum as investors maintain exposure to defensive sectors.
  • Communication Services (XSJ) has entered the Leading quadrant, representing one of the most significant rotations in the latest RRG. The move confirms strengthening relative performance following several sessions of improving momentum.

Improving Quadrant

  • Telecommunication Services (XTJ) remains within the Improving quadrant, with its positive trajectory suggesting continued momentum improvement. A sustained increase in relative strength could see the sector rotate into Leading in the coming sessions.
  • Materials (XMJ) continue strengthening within Improving, indicating mining and resource stocks are steadily building relative momentum.
  • Real Estate (XJR) remains comfortably positioned in Improving as investors continue accumulating interest rate-sensitive property stocks.
  • Consumer Discretionary (XPJ) continues to recover within Improving, reflecting improving sentiment towards consumer-related companies.
  • Industrials (XNJ) remain in Improving, suggesting economically sensitive businesses continue regaining relative strength.

Weakening Quadrant

  • Energy (XEJ) has entered the Weakening quadrant, signalling that although the sector continues to outperform the broader market, positive momentum has begun to fade following a prolonged period of leadership.
  • Financials (XFJ) remain in the Weakening quadrant. Australia's major banks continue to display above-average relative strength, but weakening momentum suggests institutional buying has become increasingly selective.

Lagging Quadrant

  • Information Technology (XIJ) remains in the Lagging quadrant despite showing limited evidence of stabilisation.
  • Health Care (XHJ) continues to be the weakest sector on the Relative Rotation Graph, remaining deep within Lagging with little indication of a sustained recovery.
  • Consumer Staples (XDJ) also remain in Lagging, although investors will continue monitoring for improvements in momentum before the sector can rotate into Improving.

Strategic Summary

The latest Relative Rotation Graph indicates that Utilities (XUJ) and Communication Services (XSJ) now occupy the Leading quadrant, confirming both sectors as the Australian market's strongest relative performers. Meanwhile, Telecommunication Services (XTJ), Materials (XMJ), Real Estate (XJR), Consumer Discretionary (XPJ), and Industrials (XNJ) continue strengthening within the Improving quadrant, reinforcing the ongoing rotation towards sectors exhibiting improving momentum.

At the same time, Energy (XEJ) has rotated into the Weakening quadrant, joining Financials (XFJ) as sectors experiencing fading momentum despite maintaining positive relative strength. Information Technology (XIJ), Health Care (XHJ), and Consumer Staples (XDJ) continue to underperform in the Lagging quadrant. Overall, the latest sector rotation suggests institutional capital is increasingly favouring sectors demonstrating strengthening momentum while gradually reducing exposure to previously leading sectors that are beginning to lose momentum.