Key Momentum Shifts

  • Health Care (XHJ) has entered the Weakening quadrant after an extended period of leadership, signalling fading momentum despite maintaining strong relative strength.
  • 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 Improving sector, extending its powerful recovery trajectory and moving closer to market leadership.
  • Information Technology (XIJ) and Technology (XTJ) continue to strengthen within Improving, maintaining some of the most constructive momentum profiles on the ASX.
  • Real Estate (XJR) has entered the Improving quadrant, highlighting a meaningful improvement in both relative strength and momentum.
  • Industrials (XNJ) have entered the Lagging quadrant, reflecting deterioration in both momentum and relative performance.
  • Utilities (XUJ) and Materials (XMJ) remain in Lagging but continue to show gradual signs of recovery.

The Relative Rotation Graph (RRG) for 13 July 2026 highlights a notable shift in sector leadership across the Australian market. While Financials remain the market's dominant leadership group, Health Care has rotated into Weakening after months of outperformance. Meanwhile, Energy, Information Technology, Technology, and Real Estate continue to strengthen within Improving, suggesting that market leadership may broaden further in the coming weeks. The latest rotational structure reflects increasing investor interest in cyclical and growth-oriented sectors while some traditional defensive leaders lose momentum.

ASX Sector Momentum Summary

ASX Sector Relative Momentum Chart (at the closing price of 13/07/2026). Powered by: amibroker.com

Momentum Breakdown by Quadrant

Leading Quadrant

  • Financials (XFJ) remain the only sector within the Leading quadrant. Although momentum has moderated from recent highs, relative strength remains firmly above market averages. Confidence in Australia's banking sector, attractive dividend yields, and resilient earnings expectations continue to support the sector's leadership position.

Improving Quadrant

  • Energy (XEJ) remains the strongest momentum story on the ASX. The sector continues its impressive north-east rotation after recovering from deep Lagging territory earlier in the year. The sustained improvement reflects growing investor confidence in energy and commodity-related opportunities. If current momentum persists, Energy remains one of the sectors most likely to enter the Leading quadrant in the near term.
  • Information Technology (XIJ) continues its powerful recovery within the Improving quadrant. Despite recent weakness in daily performance, the sector remains one of the strongest positive rotational trends on the chart, signalling renewed investor appetite for growth-oriented investments. Continued improvement in relative strength may allow the sector to challenge the current leadership group over the coming weeks.
  • Technology (XTJ) remains firmly positioned in Improving. Although momentum gains have become more measured, the sector continues to display constructive rotational behaviour. The steady recovery suggests investors are gradually rebuilding exposure to technology shares following a prolonged period of relative underperformance.
  • Real Estate (XJR) has entered the Improving quadrant after spending an extended period in Lagging. The sector's north-east rotation indicates a meaningful improvement in both momentum and relative performance. Continued strengthening could allow Real Estate to become a more influential contributor to market leadership.

Weakening Quadrant

  • Health Care (XHJ) has entered Weakening after previously occupying a dominant leadership position. While relative strength remains among the strongest on the market, the loss of momentum suggests investors are becoming more selective toward defensive growth opportunities. Continued deterioration could result in a further rotation toward Lagging.
  • Consumer Discretionary (XDJ) remains within Weakening but continues to rotate north-east. Relative strength remains favourable, and the improving trajectory suggests the sector may eventually re-enter leadership if momentum continues to strengthen.
  • Consumer Staples (XSJ) remain in Weakening, although recent rotational behaviour indicates momentum is stabilising. While relative strength remains above average, stronger momentum will be required before leadership characteristics can re-emerge.

Lagging Quadrant

  • Industrials (XNJ) have entered Lagging, reflecting weakening relative strength and deteriorating momentum. The sector will need to establish a sustained recovery in momentum before a more constructive outlook can emerge.
  • Communication Services (XPJ) remain in Lagging despite signs of stabilisation. Both relative strength and momentum remain below market averages, limiting near-term leadership potential.
  • Utilities (XUJ) remain in Lagging but continue to rotate steadily toward the Improving quadrant. The sector's north-east trajectory suggests relative underperformance is moderating and that a more constructive phase may be developing.
  • Materials (XMJ) remain in Lagging but continue to display encouraging signs of recovery. Following an extended period of underperformance, the sector's recent rotational behaviour suggests investors are becoming more willing to revisit resource-related opportunities. While relative strength remains weak, momentum is gradually improving.

Strategic Summary

The latest RRG confirms that Financials (XFJ) remain the ASX's primary leadership sector, maintaining the strongest combination of relative strength and momentum. However, the most significant development is the rotation of Health Care (XHJ) into Weakening, signalling that one of the market's traditional leaders is beginning to lose momentum.

At the same time, Energy (XEJ), Information Technology (XIJ), Technology (XTJ), and Real Estate (XJR) continue to strengthen within Improving and appear best positioned to challenge the existing leadership group in the coming weeks.

Meanwhile, Industrials (XNJ) have deteriorated into Lagging, while Utilities (XUJ) and Materials (XMJ) continue their gradual recovery. Overall, the sector rotation picture remains constructive, with leadership broadening beyond traditional defensive sectors as cyclical and growth-oriented sectors continue to gain momentum.