ASX Sector Momentum Update: Health Care and Financials Continue to Lead

Robert Luong

06 July 2026 09:50 AM AEST

ASX Sector Momentum Update: Health Care and Financials Continue to Lead

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Key Momentum Shifts

Health Care (XHJ) remains the strongest sector, holding a dominant position within the Leading quadrant.
Financials (XFJ) continue to provide market leadership with solid relative strength.
Technology (XTJ) remains the only sector in the Improving quadrant, making it the market's primary emerging leadership candidate.
Consumer and Industrial sectors remain in the Weakening quadrant, signalling fading momentum.
Energy, Materials, Real Estate, Utilities, and XIJ remain trapped in the Lagging quadrant despite some strong daily price gains.

The Relative Rotation Graph (RRG) for 3 July 2026 continues to show a concentrated leadership structure within the ASX market. While the broader market rallied strongly during the session, relative strength remains focused primarily on Health Care and Financials. Technology continues to improve, while several sectors remain stuck in either Weakening or Lagging, suggesting investors are still highly selective in their sector allocation decisions.

ASX Sector Momentum Summary

ASX Sector Relative Momentum Chart (at the closing price of 03/07/2026). Powered by: amibroker.com

Momentum Breakdown by Quadrant

Leading Quadrant

Health Care (XHJ) remains the market's strongest sector, combining robust relative strength with positive momentum. The sector's strong daily gain of 2.67% reinforces its position as the ASX's primary leadership group. Financials (XFJ) also remain firmly within Leading, supported by continued institutional demand and resilient earnings expectations. Together, these two sectors continue to provide the strongest relative performance in the market.

Improving Quadrant

Information Technology (XTJ) remains the only sector positioned in Improving. The sector continues to rotate north-east, indicating strengthening momentum after an extended period of underperformance. If this trend continues, Technology could eventually challenge for a position within the Leading quadrant.

Weakening Quadrant

Consumer Staples (XSJ), Consumer Discretionary (XDJ), Communication Services (XPJ), and Industrials (XNJ) remain in the Weakening quadrant. Although these sectors continue to exhibit above-average relative strength, momentum is fading. Without a renewed improvement in buying pressure, the risk of a move into Lagging remains elevated.

Lagging Quadrant

Energy (XEJ), Real Estate (XJR), Information Technology (XIJ), Materials (XMJ), and Utilities (XUJ) remain positioned within Lagging. Notably, Materials and Real Estate delivered strong gains during the latest session, yet the RRG suggests their broader relative-performance trends remain weak. Utilities continue to struggle, while Energy remains one of the market's weakest sectors.

Strategic Summary

The latest RRG confirms that Health Care and Financials remain the ASX's dominant leadership groups, while Technology continues to emerge as the most promising recovery candidate. At the same time, a large number of sectors remain either in Weakening or Lagging, indicating that market leadership remains relatively narrow despite the strong rally on 3 July. Overall, investors continue to favour sectors with proven relative strength while remaining cautious toward areas where momentum remains weak.

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