Key Momentum Shifts

  • Energy (XEJ) remains firmly in the Leading quadrant and continues to strengthen, reinforcing its position as the ASX's strongest momentum sector.
  • Financials (XFJ) remain in the Leading quadrant but continue to lose momentum, suggesting leadership is gradually fading.
  • Technology (XTJ) has moved closer to the Leading quadrant as improving momentum continues to build.
  • Information Technology (XIJ) and Real Estate (XJR) remain in Improving, maintaining constructive momentum profiles.
  • Health Care (XHJ), Consumer Staples (XSJ), and Consumer Discretionary (XDJ) remain in Weakening, reflecting fading momentum despite retaining positive relative strength.
  • Materials (XMJ), Utilities (XUJ), Communication Services (XPJ), and Industrials (XNJ) remain in Lagging, although Utilities continue to show gradual improvement.
  • The latest rotation suggests Energy continues to dominate sector leadership, while Technology is emerging as the next sector likely to rotate into the Leading quadrant.

The latest Relative Rotation Graph (RRG) for 20 July 2026 shows that leadership across the Australian share market remains concentrated in Energy, while Financials continue to lose momentum despite remaining in the Leading quadrant. Meanwhile, Technology has strengthened further within Improving and now appears close to joining the market leaders. Defensive sectors continue to weaken, while several cyclical sectors remain trapped in Lagging, highlighting ongoing investor selectivity across the ASX.

ASX Sector Relative Momentum Chart

ASX Sector Relative Momentum Chart (at the closing price of 20/07/2026). Powered by: amibroker.com.

Momentum Breakdown by Quadrant

Leading Quadrant

  • Energy (XEJ) remains the market's strongest momentum sector. The continued north-east trajectory indicates that both relative strength and momentum remain firmly positive, suggesting institutional investors continue to favour energy-related stocks.
  • Financials (XFJ) remain in the Leading quadrant but continue to drift lower within the quadrant. Although relative strength remains above the market average, weakening momentum suggests the sector's leadership is gradually fading.

Improving Quadrant

  • Technology (XTJ) has continued its positive rotation and is now approaching the Leading quadrant. Its improving momentum suggests investor confidence in technology shares continues to strengthen, making it one of the sectors to watch over the coming weeks.
  • Information Technology (XIJ) remains within Improving after recovering sharply from Lagging. Although its momentum has moderated slightly, the sector continues to display constructive relative strength.
  • Real Estate (XJR) also remains in Improving and continues to recover steadily. The sector's improving trajectory suggests investors are gradually rebuilding exposure after a prolonged period of underperformance.

Weakening Quadrant

  • Health Care (XHJ) remains in Weakening. While relative strength continues to outperform much of the market, declining momentum indicates investors have become more selective toward defensive growth stocks.
  • Consumer Staples (XSJ) continue to reside within Weakening after losing momentum from earlier leadership. Additional improvement will be required before the sector can challenge for leadership again.
  • Consumer Discretionary (XDJ) also remains in Weakening. Although relative performance remains positive, momentum continues to soften as investors rotate into stronger sectors.

Lagging Quadrant

  • Materials (XMJ) remain in Lagging despite signs of stabilisation. Relative performance continues to trail the broader market.
  • Utilities (XUJ) remain in Lagging but continue to improve gradually. Sustained momentum will be required before the sector can rotate into Improving.
  • Communication Services (XPJ) continue to reside in Lagging, although downside momentum has eased compared with recent weeks.
  • Industrials (XNJ) also remain in Lagging and continue to exhibit relatively weak performance versus the broader market.

Strategic Summary

The latest RRG confirms that Energy (XEJ) remains the dominant leadership sector on the ASX, supported by strong relative strength and sustained momentum. Financials (XFJ) continue to occupy the Leading quadrant but are steadily losing momentum, while Technology (XTJ) has strengthened further within Improving and now appears well positioned to become the next sector to rotate into Leadership.

Meanwhile, Information Technology (XIJ) and Real Estate (XJR) continue to improve, while Health Care (XHJ), Consumer Staples (XSJ), and Consumer Discretionary (XDJ) remain in Weakening. Materials (XMJ), Utilities (XUJ), Communication Services (XPJ), and Industrials (XNJ) continue to underperform in Lagging. Overall, sector rotation remains constructive, with leadership broadening beyond Energy as growth-oriented sectors steadily build momentum.