Key Momentum Shifts

  • Financials (XFJ) remain the only sector in the Leading quadrant, continuing to exhibit the strongest combination of relative strength and momentum.
  • Energy (XEJ) remains the strongest sector in Improving, maintaining a powerful north-east trajectory and remaining the sector most likely to challenge for leadership.
  • Materials (XMJ) have rotated into Improving, signalling a meaningful improvement in relative momentum following a prolonged period of underperformance.
  • Real Estate (XJR) continues to strengthen within Improving and is building an increasingly constructive momentum profile.
  • Health Care (XHJ), Consumer Staples (XSJ), and Consumer Discretionary (XDJ) remain in Weakening, indicating fading momentum despite maintaining positive relative strength.
  • Industrials (XNJ), Utilities (XUJ), and Communication Services (XPJ) remain in Lagging, reflecting continued relative underperformance.
  • Information Technology (XIJ) and Technology (XTJ) remain in Improving and continue to display constructive momentum characteristics.

The Relative Rotation Graph (RRG) for 15 July 2026 continues to highlight a constructive rotational backdrop within the Australian equity market. Financials remain the sole sector occupying the Leading quadrant, while a growing number of cyclical and growth-oriented sectors are strengthening within Improving. Energy continues to dominate the momentum landscape, while Materials and Real Estate are showing increasingly positive relative strength characteristics. Meanwhile, Health Care has slipped into Weakening and Industrials remain in Lagging, indicating a continued shift in investor preference toward sectors exhibiting stronger momentum profiles.

ASX Sector Relative Momentum Chart

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 comfortably above market averages. Strong earnings expectations, resilient banking profitability, and attractive dividend yields continue to underpin investor demand. As the market's 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 current trajectory suggests Energy remains the sector most likely to transition into Leadership should current trends persist.
  • Real Estate (XJR) continues to strengthen within Improving, maintaining a constructive rotational profile. The sector's ongoing improvement suggests investors are becoming increasingly confident in property-related opportunities following a prolonged period of relative weakness.
  • Materials (XMJ) have successfully rotated into Improving after spending an extended period in Lagging. This transition represents a meaningful improvement in relative momentum and may indicate that investor appetite for resource-related opportunities is beginning to recover.
  • 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 moderation in momentum. Its 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 above market averages, declining momentum suggests investors are becoming increasingly selective toward defensive growth sectors.
  • 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 required to regain leadership status.
  • Consumer Discretionary (XDJ) also remains in Weakening. Although relative strength remains positive, fading momentum indicates that investors are becoming more cautious toward consumer-focused opportunities after a period of outperformance.

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 despite showing gradual improvement. While relative strength remains below market averages, the 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. 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. Materials' successful rotation into Improving represents one of the most notable developments on the chart and may signal a recovery in investor sentiment toward resource-related sectors.

Energy remains the market's strongest momentum story and appears closest to challenging for leadership. Meanwhile, Real Estate and Materials continue to display increasingly constructive rotational profiles, suggesting capital is rotating toward cyclical and recovery-oriented opportunities. Conversely, Health Care remains in Weakening, while Industrials, Utilities, and Communication Services 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.