Key Momentum Shifts

  • Financials (XFJ) remain the sole sector in the Leading quadrant, continuing to demonstrate the strongest combination of relative strength and momentum.
  • Energy (XEJ) remains the strongest sector in Improving, extending its powerful north-east trajectory and remaining the sector most likely to challenge for leadership.
  • Materials (XMJ) continue to strengthen within Improving, reflecting improving investor sentiment toward resource-related opportunities.
  • Real Estate (XJR) remains firmly positioned in Improving and continues to build positive momentum following its recent recovery.
  • Health Care (XHJ), Consumer Staples (XSJ), and Consumer Discretionary (XDJ) remain in Weakening, indicating a loss of momentum despite maintaining positive relative strength.
  • Industrials (XNJ), Utilities (XUJ), and Communication Services (XPJ) remain in Lagging, with Industrials continuing to struggle following its recent rotational downgrade.
  • Information Technology (XIJ) and Technology (XTJ) remain in Improving and continue to exhibit constructive momentum profiles.

The Relative Rotation Graph (RRG) for 15 July 2026 continues to highlight a constructive rotation beneath the surface of the Australian equity market. Financials remain the only sector occupying the Leading quadrant, while several cyclical and growth-oriented sectors continue to strengthen within Improving. Energy remains the dominant momentum story, while Materials and Real Estate are building increasingly constructive relative strength profiles. Meanwhile, Health Care remains in Weakening and Industrials continue to reside in Lagging, reflecting an ongoing shift in investor preference toward sectors offering stronger momentum characteristics.

ASX Sector Momentum Summary

ASX Sector Relative Momentum Chart (at the closing price of 15/07/2026). Powered by: amibroker.com

Momentum Breakdown by Quadrant

Leading Quadrant

  • Financials (XFJ) remain the sole sector positioned within the Leading quadrant. Although momentum has moderated from earlier peaks, relative strength remains firmly above market averages. Strong banking profitability, resilient earnings expectations, and attractive dividend yields continue to support investor demand. As the only leadership sector, Financials remain the benchmark against which other sectors are currently measured.

Improving Quadrant

  • Energy (XEJ) remains the strongest momentum story on the ASX. The sector continues its impressive north-east rotation within Improving and remains significantly ahead of all other sectors in terms of momentum. The trajectory suggests Energy remains the sector most likely to transition into Leadership if current trends persist.
  • Real Estate (XJR) continues to strengthen within Improving, maintaining a constructive rotational profile. The sector's continued improvement suggests investors are becoming increasingly confident in property-related opportunities following a prolonged period of underperformance.
  • Materials (XMJ) remain firmly positioned in Improving and continue to build momentum. The sector's strengthening profile reflects growing investor interest in resource-related companies and commodity-linked opportunities. Further gains in relative strength could eventually position Materials as a future leadership candidate.
  • Information Technology (XIJ) continues to display one of the strongest positive rotational trends on the chart. The sector remains firmly positioned within Improving and continues to benefit from renewed investor appetite for growth-oriented investments.
  • Technology (XTJ) remains in Improving despite some recent moderation in momentum. The sector's constructive position suggests investors continue to rebuild exposure following a prolonged period of relative weakness.

Weakening Quadrant

  • Health Care (XHJ) remains in Weakening after rotating out of Leadership. While relative strength remains comfortably above market averages, declining momentum suggests investors are becoming increasingly selective toward defensive growth sectors. Continued deterioration could eventually lead to a move toward Lagging.
  • Consumer Staples (XSJ) remain within Weakening, although recent rotational behaviour suggests downside momentum may be stabilising. The sector continues to maintain reasonable relative strength but lacks the momentum necessary to regain leadership status.
  • Consumer Discretionary (XDJ) remains in Weakening but continues to rotate gradually north-east. Relative strength remains positive, and further momentum improvement could eventually support a return toward Leadership.

Lagging Quadrant

  • Industrials (XNJ) remain in Lagging following their recent downgrade from Weakening. The sector continues to exhibit deteriorating relative strength and momentum, suggesting investors currently favour alternative cyclical opportunities.
  • Utilities (XUJ) remain in Lagging but continue to display gradual improvement. Although relative strength remains below market averages, the sector's improving momentum profile suggests the worst of the underperformance may be passing.
  • Communication Services (XPJ) remain firmly positioned in Lagging. Both momentum and relative strength remain below benchmark levels, limiting the sector's ability to participate in broader market leadership at this stage.

Strategic Summary

The latest RRG confirms that Financials (XFJ) remain the ASX's sole leadership sector, maintaining the strongest combination of relative strength and momentum. However, leadership beneath the surface continues to broaden as Energy (XEJ), Materials (XMJ), Real Estate (XJR), Information Technology (XIJ), and Technology (XTJ) strengthen within the Improving quadrant.

Energy remains the market's strongest momentum story and appears closest to challenging for leadership. Materials and Real Estate are also showing increasingly constructive rotational profiles, suggesting investor capital continues to move toward cyclical and recovery-oriented opportunities. Conversely, Health Care remains in Weakening, while Industrials continue to reside in Lagging, reflecting an ongoing rotation away from several previously favoured sectors.

Overall, the sector rotation picture remains constructive, with multiple sectors positioning themselves to challenge Financials for market leadership in the weeks ahead.