Key Momentum Shifts

  • Energy (XEJ) remains the sole sector in the Leading quadrant, continuing to exhibit the strongest combination of relative strength and momentum across the ASX.
  • Communication Services (XPJ) has successfully rotated into the Improving quadrant, signalling strengthening relative momentum after an extended period in Lagging.
  • Materials (XMJ), Real Estate (XJR), Utilities (XUJ), and Technology (XTJ) remain in Improving, reinforcing the constructive outlook for several cyclical and growth-oriented sectors.
  • Financials (XFJ) has rotated into the Weakening quadrant, indicating that although relative strength remains positive, momentum continues to soften.
  • Consumer Discretionary (XDJ) and Health Care (XHJ) remain in Weakening, reflecting continued deterioration in relative momentum.
  • Industrials (XNJ), Consumer Staples (XSJ), and Information Technology (XIJ) continue to reside in Lagging, indicating persistent relative underperformance.

The latest Relative Rotation Graph (RRG) for 24 July 2026 highlights another shift in ASX sector leadership. Energy continues to dominate the Leading quadrant as the market's strongest momentum sector, while Financials have rotated into Weakening as leadership begins to fade. Meanwhile, Communication Services has joined Materials, Real Estate, Utilities, and Technology in the Improving quadrant, signalling that relative momentum is strengthening across a broader group of sectors. In contrast, Industrials, Consumer Staples, and Information Technology remain trapped in Lagging, while Consumer Discretionary and Health Care continue losing momentum within Weakening. Overall, sector rotation continues to favour industries exhibiting improving relative momentum while investors remain cautious towards sectors with weakening leadership characteristics.

ASX Sector Relative Momentum Chart (at the closing price of 24/07/2026). Powered by: amibroker.com.

Momentum Breakdown by Quadrant

Leading Quadrant

  • Energy (XEJ) remains the strongest momentum sector on the ASX. Its position deep within the Leading quadrant continues to confirm superior relative strength and sustained momentum, suggesting institutional investors remain committed to energy-related companies. Although the sector's trajectory has moderated slightly, it continues to lead the broader market.

Improving Quadrant

  • Communication Services (XPJ) has successfully rotated into the Improving quadrant after spending an extended period in Lagging. This rotation signals strengthening relative momentum and suggests investor sentiment towards communication-related companies is gradually improving. If the current trajectory persists, the sector could emerge as a future market leader.
  • Materials (XMJ) remain firmly positioned within the Improving quadrant. Despite the sector experiencing short-term profit-taking during the latest trading session, its continued improvement in relative momentum indicates that longer-term investor confidence remains constructive.
  • Real Estate (XJR) continues to strengthen within the Improving quadrant. The sector's positive north-easterly trajectory reflects improving relative momentum and suggests institutional investors continue increasing exposure to property-related companies.
  • Utilities (XUJ) remain firmly in the Improving quadrant and continue exhibiting strengthening momentum. The sector remains well positioned to rotate into the Leading quadrant should current momentum persist.
  • Technology (XTJ) continues to reside in the Improving quadrant. Although recent price performance has weakened, the sector continues to display improving relative momentum relative to the broader market and remains one of the stronger growth-oriented industries.

Weakening Quadrant

  • Financials (XFJ) has rotated from Leading into the Weakening quadrant. Although the sector continues to outperform the broader market on a relative basis, its south-westerly rotation indicates momentum is fading and investors may be becoming more selective towards banking and financial stocks.
  • Consumer Discretionary (XDJ) remains within the Weakening quadrant. The continued deterioration in momentum suggests investors remain cautious towards consumer-related companies despite maintaining above-average relative strength.
  • Health Care (XHJ) continues to occupy the Weakening quadrant and remains one of the weakest sectors on the RRG. Both momentum and relative strength continue to deteriorate, reflecting an ongoing rotation away from defensive healthcare stocks.

Lagging Quadrant

  • Industrials (XNJ) remain in the Lagging quadrant, reflecting persistent relative weakness. Although downside momentum has moderated, additional improvement in relative strength will be required before the sector can rotate into Improving.
  • Consumer Staples (XSJ) continue to reside within Lagging, indicating investors remain underweight defensive consumer stocks as capital continues flowing towards sectors exhibiting stronger momentum characteristics.
  • Information Technology (XIJ) remains firmly positioned in the Lagging quadrant and continues to be one of the weakest relative performers on the ASX. Despite periods of short-term volatility, the sector has yet to demonstrate sustained improvement in either relative strength or momentum.

Strategic Summary

The latest Relative Rotation Graph confirms that Energy (XEJ) remains the dominant leadership sector on the ASX, supported by exceptional relative strength and sustained momentum. Meanwhile, Communication Services (XPJ) has successfully joined Materials (XMJ), Real Estate (XJR), Utilities (XUJ), and Technology (XTJ) in the Improving quadrant, suggesting market leadership continues to broaden.

Conversely, Financials (XFJ) has transitioned into the Weakening quadrant, signalling that its leadership is beginning to fade, while Consumer Discretionary (XDJ) and Health Care (XHJ) continue to lose momentum. Industrials (XNJ), Consumer Staples (XSJ), and Information Technology (XIJ) remain in Lagging, highlighting continued relative underperformance. Overall, the latest sector rotation suggests investors continue favouring sectors exhibiting strengthening momentum while reducing exposure to industries with deteriorating relative leadership.