Key Momentum Shifts

  • Energy (XEJ) remains firmly in the Leading quadrant and continues to exhibit the strongest relative strength across the ASX.
  • Financials (XFJ) remain in Leading, although momentum continues to moderate, suggesting leadership is gradually becoming less dominant.
  • Information Technology (XIJ) has rotated into the Improving quadrant, signalling a meaningful recovery in relative momentum following several weeks of underperformance.
  • Technology (XTJ), Utilities (XUJ), and Real Estate (XJR) remain in Improving, reinforcing the growing strength among several cyclical and growth-oriented sectors.
  • Consumer Discretionary (XDJ), Health Care (XHJ), and Consumer Staples (XSJ) continue to reside in Weakening, indicating that momentum continues to fade despite maintaining above-average relative strength.
  • Materials (XMJ), Communication Services (XPJ), and Industrials (XNJ) remain in Lagging, although Communication Services is beginning to stabilise.
  • The latest sector rotation suggests leadership is gradually broadening beyond Energy, with Information Technology joining Technology, Utilities, and Real Estate as emerging leadership candidates.

The latest Relative Rotation Graph (RRG) for 21 July 2026 highlights another constructive shift in the Australian market. Energy continues to dominate the Leading quadrant alongside Financials, while Information Technology has successfully rotated into Improving, joining Technology, Utilities, and Real Estate. Meanwhile, Health Care, Consumer Staples, and Consumer Discretionary remain in Weakening, while Materials, Communication Services, and Industrials continue to lag the broader market. Overall, sector rotation continues to favour growth-oriented sectors as institutional capital gradually broadens beyond the market's traditional leaders.

ASX Sector Relative Momentum Chart

ASX Sector Relative Momentum Chart (at the closing price of 21/07/2026). Powered by: amibroker.com.

Momentum Breakdown by Quadrant

Leading Quadrant

  • Energy (XEJ) remains the strongest sector on the Relative Rotation Graph. Its position deep within the Leading quadrant reflects robust relative strength and sustained momentum, indicating investors continue to favour energy-related companies.
  • Financials (XFJ) continue to reside in the Leading quadrant. Although momentum has moderated compared with earlier weeks, the sector maintains above-average relative strength and remains an important source of market leadership.

Improving Quadrant

  • Information Technology (XIJ) has rotated into the Improving quadrant after recovering from a prolonged period of weakness. The move signals strengthening relative momentum and suggests institutional investors are rebuilding exposure to technology-related shares.
  • Technology (XTJ) remains firmly positioned within Improving and continues to move toward the Leading quadrant. The sector's steady north-east trajectory indicates improving investor confidence and positions it as one of the strongest candidates for future leadership.
  • Utilities (XUJ) continue to strengthen within Improving. The sector has steadily improved its momentum profile and is gradually approaching the Leading quadrant.
  • Real Estate (XJR) also remains in Improving, with both momentum and relative strength continuing to recover. The sector appears well positioned to extend its recovery should current trends persist.

Weakening Quadrant

  • Consumer Discretionary (XDJ) remains in Weakening. Although relative strength remains above the benchmark, declining momentum suggests investors have become more selective toward consumer-related stocks.
  • Health Care (XHJ) continues to reside in Weakening after losing momentum from its previous leadership position. While still maintaining relatively strong performance versus the broader market, the sector continues to experience fading momentum.
  • Consumer Staples (XSJ) also remains within Weakening. Momentum continues to soften, indicating that defensive sectors remain out of favour as investors rotate toward stronger growth opportunities.

Lagging Quadrant

  • Materials (XMJ) remain in Lagging despite showing early signs of stabilisation. Relative performance continues to trail the broader market.
  • Communication Services (XPJ) remain within Lagging, although the sector's improving trajectory suggests downside momentum is beginning to ease. Continued improvement may eventually allow the sector to rotate into Improving.
  • Industrials (XNJ) also remain in Lagging, reflecting persistent relative underperformance despite some stabilisation in recent sessions.

Strategic Summary

The latest RRG indicates that Energy (XEJ) continues to dominate the Australian market from a momentum perspective, while Financials (XFJ) remain an important leadership sector despite gradually moderating momentum. A key development in the latest rotation is Information Technology (XIJ) moving into the Improving quadrant, joining Technology (XTJ), Utilities (XUJ), and Real Estate (XJR) as emerging leadership candidates.

Meanwhile, Consumer Discretionary (XDJ), Health Care (XHJ), and Consumer Staples (XSJ) remain in Weakening, reflecting ongoing momentum deterioration. Materials (XMJ), Communication Services (XPJ), and Industrials (XNJ) continue to underperform in Lagging, although Communication Services is showing encouraging signs of stabilisation. Overall, the current RRG suggests leadership is gradually broadening across the ASX, with several growth-oriented sectors strengthening while Energy continues to anchor the market's leadership structure.