Key Momentum Shifts

  • Energy (XEJ) has rotated into the Leading quadrant, becoming the market's strongest momentum sector.
  • Financials (XFJ) remain in the Leading quadrant but continue to lose momentum after previously leading the market.
  • Real Estate (XJR), Information Technology (XIJ), and Technology (XTJ) remain in Improving, maintaining constructive momentum profiles.
  • Health Care (XHJ), Consumer Staples (XSJ), and Consumer Discretionary (XDJ) remain in Weakening, indicating declining momentum despite retaining positive relative strength.
  • Materials (XMJ) and Industrials (XNJ) remain in Lagging, highlighting continued relative underperformance.
  • Utilities (XUJ) and Communication Services (XPJ) also remain in Lagging despite showing early signs of stabilisation.
  • The latest sector rotation suggests investor leadership is shifting from Financials towards Energy, while growth-related sectors continue to improve.

The latest Relative Rotation Graph (RRG) for 17 July 2026 highlights another important shift in sector leadership across the Australian equity market. Energy has successfully rotated into the Leading quadrant, overtaking Financials as the market's strongest momentum story. Meanwhile, several growth-oriented sectors continue to strengthen within Improving, while Health Care and other defensive sectors continue to lose momentum. Although leadership is becoming more diversified, several economically sensitive sectors remain trapped in Lagging, reflecting continued investor selectivity.

ASX Sector Relative Momentum Chart

ASX Sector Relative Momentum Chart (at the closing price of 17/07/2026). Powered by: amibroker.com.

Momentum Breakdown by Quadrant

Leading Quadrant

  • Energy (XEJ) has officially entered the Leading quadrant and now displays the strongest combination of relative strength and momentum on the ASX. After an impressive recovery from deep Lagging territory over recent weeks, the sector continues to follow a powerful north-east trajectory, suggesting institutional money continues to rotate into energy-related stocks.
  • Financials (XFJ) remain in the Leading quadrant but have begun to lose momentum after leading the market for several weeks. Although relative strength remains comfortably above market averages, the recent flattening of its trajectory suggests leadership may gradually be shifting towards Energy.

Improving Quadrant

  • Real Estate (XJR) remains firmly positioned within Improving and continues to strengthen. Although the sector has yet to reclaim market leadership, its improving relative momentum suggests investors are gradually rebuilding exposure following an extended period of weakness.
  • Information Technology (XIJ) continues to display constructive momentum within Improving despite some recent moderation. The sector remains well positioned should investor appetite for growth stocks continue to strengthen.
  • Technology (XTJ) also remains within Improving and continues to rotate positively. Its steady improvement indicates investors are becoming increasingly confident in technology-related opportunities following last month's recovery.

Weakening Quadrant

  • Health Care (XHJ) remains within Weakening after previously rotating out of Leadership. While relative strength remains above market averages, declining momentum suggests investors are becoming increasingly selective toward defensive growth sectors.
  • Consumer Staples (XSJ) continue to reside within Weakening. The sector has stabilised following earlier weakness but lacks sufficient momentum to re-establish leadership.
  • Consumer Discretionary (XDJ) also remains within Weakening. Although the sector continues to outperform many areas of the market on a relative basis, fading momentum suggests investor enthusiasm has moderated.

Lagging Quadrant

  • Materials (XMJ) remain in Lagging despite recent attempts to recover. Although downside momentum has eased, the sector continues to exhibit weak relative strength compared with the broader market.
  • Industrials (XNJ) also remain in Lagging, reflecting continued underperformance. The sector has yet to generate sufficient momentum to begin rotating back toward Improving.
  • Utilities (XUJ) continue to reside in Lagging despite showing gradual improvement in momentum. Additional strengthening will be required before the sector can challenge for a higher quadrant.
  • Communication Services (XPJ) remain the weakest sector on the chart. While recent price action suggests downside momentum has moderated, relative strength remains well below market averages.

Strategic Summary

The latest RRG confirms that Energy (XEJ) has emerged as the ASX's new leadership sector after rotating into the Leading quadrant alongside Financials (XFJ). However, Financials are gradually losing momentum, suggesting Energy may continue to assume a more dominant leadership role if current trends persist.

Meanwhile, Real Estate (XJR), Information Technology (XIJ), and Technology (XTJ) continue to strengthen within Improving and remain well positioned to challenge for leadership over the coming weeks. In contrast, Health Care (XHJ), Consumer Staples (XSJ), and Consumer Discretionary (XDJ) remain in Weakening, while Materials (XMJ), Industrials (XNJ), Utilities (XUJ), and Communication Services (XPJ) continue to underperform within Lagging.

Overall, the sector rotation picture remains constructive, with leadership broadening beyond Financials. Energy now stands as the market's strongest momentum sector, while several growth-oriented sectors continue to build momentum beneath the surface, suggesting the rotation toward cyclical opportunities remains intact.