ASX Sector Momentum Update: Five Sectors Lead While Energy Enters Weakening

Robert Luong

21 August 2026 09:45 AM AEST

ASX Sector Momentum Update: Five Sectors Lead While Energy Enters Weakening

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Key Momentum Shifts

Health Care (XHJ), Information Technology (XIJ), Materials (XMJ), Resources (XJR) and Utilities (XUJ) remain positioned in the Leading quadrant, representing the strongest areas of relative momentum.
Health Care (XHJ) continues to occupy the strongest position within the Leading quadrant, maintaining strong relative strength and momentum.
Information Technology (XIJ) remains firmly in Leading but its trajectory is turning downward, indicating that its momentum is beginning to moderate.
Materials (XMJ) and Resources (XJR) continue to strengthen within Leading, with both sectors maintaining upward and rightward trajectories.
Utilities (XUJ) remains in Leading following its recent positive rotation, indicating continued improvement in relative momentum.
Energy (XEJ) is the only sector in the Weakening quadrant, signalling deterioration in relative momentum and a potential transition toward Lagging.
Financials (XFJ), Consumer Discretionary (XDJ), Real Estate (XPJ), Communication Services (XTJ), Consumer Staples (XSJ) and Industrials (XNJ) remain in Lagging.
No sectors are currently positioned in the Improving quadrant, indicating that none of the lagging sectors has yet established a convincing positive rotation.

The latest Relative Rotation Graph (RRG) for 20 August 2026 shows a highly concentrated momentum structure across the Australian Equity market. Five sectors remain in the Leading quadrant, while six sectors are positioned in Lagging and Energy is the only sector in Weakening.

The RRG therefore continues to indicate a clear separation between the market's relative leaders and laggards. The absence of sectors in Improving is particularly notable, as it suggests that the weaker areas have yet to establish a sufficiently strong momentum recovery.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 20/08/2026). Powered by: amibroker.com.

Leading Quadrant

Health Care (XHJ), Information Technology (XIJ), Materials (XMJ), Resources (XJR) and Utilities (XUJ) remain in the Leading quadrant.

Health Care (XHJ) maintains the strongest position within the Leading group. Its location near the upper-right area of the RRG indicates strong relative strength and momentum, although its recent trajectory suggests that the pace of improvement should be monitored.

Information Technology (XIJ) also remains firmly positioned in Leading. However, its trajectory is turning downward, indicating that relative momentum is beginning to moderate. Despite remaining a clear leader, continued downward movement would increase the risk of a future rotation toward Weakening.

Materials (XMJ) continues to show a strong relative position, with its trajectory moving toward the right and upward. This indicates strengthening relative momentum and supports its position among the market's leading sectors.

Resources (XJR) is also moving upward and to the right within Leading. Its trajectory indicates improving relative momentum and suggests that the sector is becoming increasingly established within the Leadership group.

Utilities (XUJ) remains in Leading and continues to show a positive trajectory. Its position indicates that the sector has successfully strengthened its relative momentum and remains an important contributor to the current leadership structure.

Overall, the five sectors in Leading demonstrate that relative momentum remains concentrated within a relatively small group. Materials, Resources and Utilities show particularly constructive trajectories, while Information Technology requires closer monitoring because of its downward rotation.

Weakening Quadrant

Energy (XEJ) is the only sector currently positioned in the Weakening quadrant.

Its position indicates that relative momentum has deteriorated and that the sector is moving away from the stronger relative position associated with Leading.

The key consideration is the direction of its RRG trajectory. Continued movement toward the lower-left and into Lagging would confirm further deterioration in relative momentum. Conversely, a Reversal toward the centre and then upward would indicate that the sector is stabilising.

Energy therefore represents the most important sector to monitor among the current leaders and near-leaders, as its rotation could provide an early indication of a broader change in the market's momentum structure.

Lagging Quadrant

Six sectors are currently positioned in Lagging: Financials (XFJ), Consumer Discretionary (XDJ), Real Estate (XPJ), Communication Services (XTJ), Consumer Staples (XSJ) and Industrials (XNJ).

Financials (XFJ) remains the deepest position within the Lagging quadrant, indicating particularly weak relative momentum compared with the broader ASX sector universe.

Consumer Discretionary (XDJ), Real Estate (XPJ), Communication Services (XTJ), Consumer Staples (XSJ) and Industrials (XNJ) also remain below the horizontal and vertical RRG midlines, confirming that their relative momentum remains weaker than the leading group.

The key issue is that none of these sectors has yet crossed into Improving. Until their trajectories demonstrate a sustained movement toward the centre of the RRG, there is limited evidence of a meaningful momentum recovery.

The concentration of six sectors in Lagging therefore continues to highlight the narrow distribution of positive momentum across the market.

Strategic Summary

The latest RRG shows that ASX sector momentum remains highly concentrated, with five sectors positioned in Leading, one in Weakening and six in Lagging.

Health Care, Information Technology, Materials, Resources and Utilities continue to represent the market's principal sources of relative momentum. Materials, Resources and Utilities display constructive upward trajectories, while Health Care remains the strongest overall position.

Information Technology remains a major leader but its downward trajectory suggests that its relative momentum is moderating. Energy is the only sector in Weakening and therefore represents the clearest area of potential deterioration.

Meanwhile, Financials, Consumer Discretionary, Real Estate, Communication Services, Consumer Staples and Industrials remain in Lagging. The absence of any sector in Improving indicates that there is currently no clear emerging challenger to the established leadership group.

Looking ahead, continued rightward and upward movement by Materials, Resources and Utilities would reinforce the current momentum leadership. A stabilisation of Information Technology and Energy would also reduce the risk of deterioration within the stronger sectors. Conversely, movement of the six Lagging sectors toward the centre of the RRG and eventually into Improving would be required to signal a meaningful broadening of ASX sector momentum.

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