Key Momentum Shifts

  • Energy (XEJ) remains firmly in the Leading quadrant and continues to exhibit the strongest relative strength and momentum across the ASX.
  • Financials (XFJ) remain in the Leading quadrant, although momentum continues to moderate, suggesting leadership is gradually fading.
  • Real Estate (XJR) and Utilities (XUJ) remain in the Improving quadrant, reflecting strengthening momentum and increasing investor interest.
  • Technology (XTJ) remains in Improving and continues to edge closer to the Leading quadrant.
  • Consumer Staples (XSJ), Consumer Discretionary (XDJ), and Health Care (XHJ) remain in Weakening, reflecting deteriorating momentum despite maintaining above-average relative strength.
  • Materials (XMJ), Communication Services (XPJ), Information Technology (XIJ), and Industrials (XNJ) continue to reside in Lagging, with Information Technology rotating back into the quadrant after previously improving.
  • The latest sector rotation suggests Energy remains the dominant market leader, while Real Estate, Utilities, and Technology continue building momentum as potential future leaders.

The latest Relative Rotation Graph (RRG) for 22 July 2026 highlights another meaningful shift in ASX sector leadership. Energy continues to dominate the Leading quadrant, while Financials remain in leadership despite steadily weakening momentum. Meanwhile, Real Estate, Utilities, and Technology continue strengthening within the Improving quadrant, whereas Information Technology has slipped back into Lagging after failing to sustain its previous recovery. Defensive sectors remain under pressure, with Health Care continuing to occupy the weakest position on the Relative Rotation Graph.

ASX Sector Relative Momentum Chart

ASX Sector Relative Momentum Chart (at the closing price of 22/07/2026). Powered by: amibroker.com.

Momentum Breakdown by Quadrant

Leading Quadrant

  • Energy (XEJ) remains the strongest momentum sector on the ASX. Its continued position deep within the Leading quadrant confirms that both relative strength and momentum remain firmly positive, indicating sustained institutional demand for energy-related companies.
  • Financials (XFJ) continue to reside within the Leading quadrant. However, the sector's south-easterly rotation indicates that momentum is gradually fading, although relative strength remains above the broader market.

Improving Quadrant

  • Real Estate (XJR) remains firmly positioned within the Improving quadrant and continues to strengthen. The sector's constructive trajectory suggests investors are steadily rebuilding exposure following an extended period of underperformance.
  • Utilities (XUJ) have advanced further within the Improving quadrant, reflecting steadily improving momentum. If the current trajectory continues, the sector could become a candidate for Leadership in the coming weeks.
  • Technology (XTJ) remains in Improving and continues to move closer to the Leading quadrant. The sustained improvement in relative momentum indicates growing investor confidence in technology shares.

Weakening Quadrant

  • Consumer Staples (XSJ) remain in Weakening as momentum continues to soften despite maintaining positive relative strength versus the broader market.
  • Consumer Discretionary (XDJ) also remains within Weakening. Although the sector continues to outperform weaker parts of the market on a relative basis, declining momentum suggests investors are rotating towards stronger cyclical sectors.
  • Health Care (XHJ) remains the weakest sector within the Weakening quadrant. Both relative strength and momentum continue to deteriorate, reflecting ongoing investor preference for more economically sensitive sectors.

Lagging Quadrant

  • Materials (XMJ) continue to reside within Lagging despite showing signs of stabilisation. Additional improvement in relative strength will be required before the sector can rotate into Improving.
  • Communication Services (XPJ) remain in Lagging, although downside momentum has moderated compared with recent weeks.
  • Information Technology (XIJ) has rotated back into the Lagging quadrant after previously recovering into Improving. The reversal suggests that recent buying momentum has weakened and the sector may require additional consolidation before resuming its recovery.
  • Industrials (XNJ) continue to occupy the Lagging quadrant and remain one of the weaker-performing sectors relative to the broader market.

Strategic Summary

The latest RRG confirms that Energy (XEJ) remains the dominant leadership sector on the ASX, supported by robust relative strength and sustained momentum. Financials (XFJ) continue to hold a position within the Leading quadrant but are gradually losing momentum. Meanwhile, Real Estate (XJR), Utilities (XUJ), and Technology (XTJ) continue strengthening within the Improving quadrant, reinforcing their potential to emerge as future market leaders.

In contrast, Consumer Staples (XSJ), Consumer Discretionary (XDJ), and Health Care (XHJ) remain in Weakening as momentum continues to fade. Materials (XMJ), Communication Services (XPJ), Information Technology (XIJ), and Industrials (XNJ) continue to underperform in the Lagging quadrant, with Information Technology slipping back after failing to sustain its previous recovery. Overall, sector rotation remains selective, with investors continuing to favour sectors demonstrating strengthening relative momentum while reducing exposure to areas exhibiting deteriorating leadership characteristics.