Key Momentum Shifts

  • Real Estate (XJR) Remains in the Leading Quadrant: Real Estate continues to occupy the Leading quadrant, confirming strong relative strength and positive momentum as the sector maintains its position at the forefront of the current ASX sector rotation.
  • Materials (XMJ) Emerges as the Strongest Improving Sector: Materials remains firmly within the Improving quadrant and is now approaching Leading, supported by strengthening relative momentum across mining and commodity-related stocks.
  • Information Technology (XIJ) Continues Advancing: Technology remains comfortably positioned in Improving, suggesting continued strengthening in relative momentum and further potential 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 relative strength.
  • Health Care (XHJ), Industrials (XNJ), Consumer Staples (XDJ), Telecommunication Services (XTJ), and Utilities (XJU) Remain Lagging: These sectors remain in the Lagging quadrant, with Utilities notably rotating into Lagging from a stronger previous position.
  • Sector Rotation Remains Selective: Four sectors now occupy the Improving quadrant while only Real Estate remains in Leading, indicating that market leadership is concentrated rather than broadly distributed across Australian equities.

The latest Relative Rotation Graph (RRG) for 7 August 2026 suggests the Australian equity market continues to exhibit selective sector rotation. Real Estate (XJR) remains the sole sector in the Leading quadrant, while Materials (XMJ), Information Technology (XIJ), Consumer Discretionary (XPJ) and Communication Services (XSJ) continue strengthening within Improving. Meanwhile, Financials and Energy remain under pressure as momentum softens, while Utilities has now rotated into Lagging.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 07/08/2026). Powered by: amibroker.com.

Leading Quadrant

  • Real Estate (XJR) remains in the Leading quadrant, confirming sustained relative strength and positive momentum as the sector continues to outperform on a relative basis. Its position indicates that property-related stocks remain a key area of market leadership.

Improving Quadrant

  • Materials (XMJ) remains the standout performer within Improving, positioned closest to the Leading quadrant. Its trajectory indicates strengthening relative momentum, suggesting continued investor interest in mining and commodity-related companies.
  • Information Technology (XIJ) continues strengthening within Improving, indicating that technology stocks are gradually building relative momentum and moving closer to market leadership.
  • Consumer Discretionary (XPJ) remains within Improving, suggesting that consumer-related shares continue to recover relative strength and attract selective investor interest.
  • Communication Services (XSJ) also remains in Improving, although its position indicates a more moderate improvement in relative momentum compared with Materials and Technology.

Weakening Quadrant

  • Financials (XFJ) remain in the Weakening quadrant, indicating that relative momentum continues to deteriorate despite the sector retaining relatively strong performance versus the broader market.
  • Energy (XEJ) remains in Weakening, reflecting continued deterioration in relative momentum. Its position suggests that the sector's previous relative strength is gradually fading.

Lagging Quadrant

  • Health Care (XHJ) continues to occupy the Lagging quadrant, indicating that relative momentum remains weak and has yet to recover sufficiently to rotate into Improving.
  • Industrials (XNJ) remain in Lagging, suggesting that the sector continues to experience relative weakness despite being positioned relatively close to the centre of the RRG.
  • Consumer Staples (XDJ) also remains in Lagging, reflecting continued weakness in relative momentum and limited evidence of an imminent rotation toward Improving.
  • Telecommunication Services (XTJ) remains in Lagging, indicating persistent relative weakness. A sustained improvement in its trajectory would be required before a rotation into Improving becomes more likely.
  • Utilities (XJU) has now entered the Lagging quadrant, marking a deterioration in relative momentum. Its new position indicates that the sector has lost sufficient relative strength to move below the centre of the RRG.

Strategic Summary

The latest Relative Rotation Graph highlights a selective rather than broad-based rotation across the Australian equity market. Real Estate (XJR) remains the sole sector in Leading, while Materials (XMJ), Information Technology (XIJ), Consumer Discretionary (XPJ) and Communication Services (XSJ) continue strengthening within Improving.

At the same time, Financials (XFJ) and Energy (XEJ) remain in Weakening, while Utilities (XJU) has entered Lagging alongside Health Care (XHJ), Industrials (XNJ), Consumer Staples (XDJ) and Telecommunication Services (XTJ).