Key Momentum Shifts

  • Real Estate (XJR) and Utilities (XUJ) Enter the Leading Quadrant: Both sectors have rotated into the Leading quadrant, confirming strong relative strength and positive momentum as institutional buying continues to favour property and defensive infrastructure stocks.
  • Materials (XMJ) Emerges as the Strongest Improving Sector: Materials remains firmly within the Improving quadrant and is now approaching Leading after delivering the strongest relative momentum among cyclical sectors.
  • Information Technology (XIJ) Continues Advancing: Technology remains comfortably positioned in Improving, supported by another strong trading session, suggesting further rotation towards market leadership.
  • Financials (XFJ) and Energy (XEJ) Stay in Weakening: Both sectors continue to lose relative momentum despite remaining on the right-hand side of the Relative Rotation Graph (RRG), indicating fading institutional interest.
  • Health Care (XHJ), Consumer Staples (XDJ), and Telecommunication Services (XTJ) Continue Lagging: These sectors remain in the Lagging quadrant, although Health Care appears to be gradually recovering after recent price strength.
  • Sector Rotation Remains Constructive: Five sectors now occupy the Improving quadrant while two sectors have established leadership, indicating broad participation across Australian equities.

The latest Relative Rotation Graph (RRG) for 6 August 2026 suggests the Australian equity market continues to exhibit healthy sector rotation. Leadership has expanded with Real Estate (XJR) joining Utilities (XUJ) in the Leading quadrant, while several growth and cyclical sectors continue strengthening within Improving. Meanwhile, Financials and Energy remain under pressure as momentum continues to soften.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 06/08/2026). Powered by: amibroker.com.

Leading Quadrant

  • Real Estate (XJR) has successfully rotated into the Leading quadrant, confirming improving relative strength and sustained positive momentum as investors continue favouring property-related stocks.
  • Utilities (XUJ) also remain within Leading, maintaining solid relative performance despite recent price weakness. Its position suggests institutional investors continue allocating capital to defensive sectors with resilient earnings.

Improving Quadrant

  • Materials (XMJ) remains the standout performer within Improving, moving closer to the Leading quadrant after recording another strong advance. Continued strength in mining and commodity-related companies is supporting its relative momentum.
  • Information Technology (XIJ) continues strengthening within Improving, reflecting sustained institutional demand for AI-related and high-growth technology companies.
  • Consumer Discretionary (XPJ) remains comfortably positioned in Improving, indicating consumer-related shares continue attracting investor interest.
  • Industrials (XNJ) also remain within Improving and are gradually building positive momentum, suggesting economically sensitive businesses continue to outperform.
  • Communication Services (XSJ) sits close to the boundary between Improving and Leading, indicating its relative performance continues to strengthen despite recent modest price weakness.

Weakening Quadrant

  • Financials (XFJ) remain in the Weakening quadrant, suggesting Australia's major banks continue to exhibit above-average relative strength, although momentum has weakened as investors rotate toward mining, property and technology sectors.
  • Energy (XEJ) remains deep within Weakening, reflecting continued deterioration in relative momentum despite previously outperforming the broader market. The sector remains the weakest area among those still holding above-average relative strength.

Lagging Quadrant

  • Health Care (XHJ) continues to occupy the Lagging quadrant. Although recent price performance has improved, relative momentum has yet to recover sufficiently to rotate into Improving.
  • Consumer Staples (XDJ) also remains in Lagging after renewed weakness, suggesting investors continue favouring higher-growth sectors.
  • Telecommunication Services (XTJ) remains in Lagging but appears to be gradually stabilising. Continued improvement in momentum could eventually support a rotation into the Improving quadrant.

Strategic Summary

The latest Relative Rotation Graph highlights a constructive rotation across the Australian equity market. Real Estate (XJR) has joined Utilities (XUJ) in the Leading quadrant, confirming expanding market leadership. Meanwhile, Materials (XMJ), Information Technology (XIJ), Consumer Discretionary (XPJ), Industrials (XNJ) and Communication Services (XSJ) continue strengthening within Improving, reinforcing the positive outlook for both cyclical and growth sectors.

At the same time, Financials (XFJ) and Energy (XEJ) remain in the Weakening quadrant, indicating leadership continues to fade despite maintaining relatively strong performance versus the broader market. Health Care (XHJ), Consumer Staples (XDJ) and Telecommunication Services (XTJ) continue to occupy Lagging, although Health Care and Telecommunication Services are showing early signs of stabilisation. Overall, the latest sector rotation suggests institutional capital continues flowing toward sectors exhibiting improving relative momentum, while Real Estate and Utilities currently set the pace for market leadership.