Key Momentum Shifts

  • Energy (XEJ) remains the only sector in the Leading quadrant, although its south-easterly trajectory indicates that relative momentum continues to moderate despite maintaining the strongest relative strength in the market.
  • Technology (XTJ) and Consumer Discretionary (XPJ) have rotated into the Improving quadrant, highlighting a meaningful recovery in relative momentum and suggesting investors are gradually rebuilding exposure to growth-oriented sectors.
  • Materials (XMJ), Real Estate (XJR), and Utilities (XUJ) continue to occupy the Improving quadrant, reinforcing strengthening momentum across cyclical and defensive sectors.
  • Financials (XFJ) and Consumer Staples (XDJ) remain in the Weakening quadrant, indicating that although both sectors continue to exhibit above-average relative strength, their leadership momentum has softened.
  • Health Care (XHJ) remains in the Lagging quadrant, joined by Information Technology (XIJ), Industrials (XNJ), and Communication Services (XSJ), highlighting continued relative underperformance across these sectors.
  • The Improving quadrant is now the most populated, suggesting sector rotation continues to favour industries exhibiting strengthening relative momentum, particularly growth-oriented sectors.
  • The rotation of Technology and Consumer Discretionary into Improving represents the most significant development, indicating improving investor sentiment towards sectors that had previously lagged the broader market.

The latest Relative Rotation Graph (RRG) for 29 July 2026 indicates a continued evolution in ASX sector rotation. Energy remains the market's sole leadership sector despite moderating momentum, while the most notable development is the rotation of Technology and Consumer Discretionary into the Improving quadrant, signalling a recovery in relative momentum across growth sectors. Meanwhile, Materials, Real Estate and Utilities continue strengthening within Improving, Financials and Consumer Staples remain in Weakening, and Health Care continues to lag alongside Information Technology, Industrials and Communication Services. Overall, the latest rotation suggests investors continue reallocating capital towards sectors demonstrating improving relative momentum while market leadership remains increasingly selective.

ASX Sector Relative Momentum Chart (at the closing price of 29/07/2026). Powered by: amibroker.com.

Momentum Breakdown by Quadrant

Leading Quadrant

  • Energy (XEJ) remains the sole sector in the Leading quadrant, continuing to demonstrate the strongest relative strength versus the broader market. However, its south-easterly trajectory indicates that relative momentum continues to moderate, suggesting its period of market leadership may be gradually maturing if the current rotation persists.

Improving Quadrant

  • Technology (XTJ) has rotated into the Improving quadrant, representing one of the most significant changes in the latest RRG. The move confirms strengthening relative momentum and suggests investors are gradually rebuilding exposure to technology stocks following an extended period of underperformance.
  • Consumer Discretionary (XPJ) has also moved into the Improving quadrant, indicating improving relative momentum as investor appetite strengthens for consumer-related companies.
  • Materials (XMJ) remain firmly positioned within Improving despite recent volatility in commodity markets. The sector continues to display strengthening relative momentum, suggesting institutional investors remain constructive on mining and resource companies over the medium term.
  • Real Estate (XJR) continues to strengthen within the Improving quadrant. Its constructive trajectory reinforces improving relative strength and suggests the sector remains well positioned to rotate into the Leading quadrant should current momentum persist.
  • Utilities (XUJ) remain in the Improving quadrant, maintaining constructive relative momentum despite relatively modest price performance. Continued defensive demand could support additional strengthening in the coming sessions.

Weakening Quadrant

  • Financials (XFJ) remain within the Weakening quadrant. While the sector continues to exhibit above-average relative strength, its trajectory indicates leadership momentum has softened as investors become increasingly selective towards Australia's major banks and financial institutions.
  • Consumer Staples (XDJ) also remain in the Weakening quadrant. Although the sector continues to outperform the broader market on a relative basis, moderating momentum suggests renewed buying interest will be required before leadership characteristics can re-emerge.

Lagging Quadrant

  • Health Care (XHJ) remains within the Lagging quadrant, highlighting continued relative underperformance despite the sector's strong absolute price performance during the latest trading session. Sustained improvements in both relative strength and momentum will be required before the sector can rotate into Improving.
  • Information Technology (XIJ) continues to reside within Lagging despite showing signs of recovery. Additional gains in relative strength and momentum will be required before the sector exits the quadrant.
  • Industrials (XNJ) remain in the Lagging quadrant, indicating institutional investors continue to underweight economically sensitive industrial companies.
  • Communication Services (XSJ) also remain within Lagging, although its trajectory suggests downside momentum has begun to moderate compared with previous sessions.

Strategic Summary

The latest Relative Rotation Graph indicates that Energy (XEJ) remains the Australian market's only leadership sector, although its moderating trajectory suggests relative momentum continues to soften. More importantly, Technology (XTJ) and Consumer Discretionary (XPJ) have rotated into the Improving quadrant, joining Materials (XMJ), Real Estate (XJR) and Utilities (XUJ) as sectors exhibiting strengthening relative momentum.

Meanwhile, Financials (XFJ) and Consumer Staples (XDJ) continue to occupy the Weakening quadrant, while Health Care (XHJ), Information Technology (XIJ), Industrials (XNJ) and Communication Services (XSJ) remain in Lagging. Overall, the latest sector rotation suggests investors continue reallocating capital towards sectors demonstrating improving momentum while reducing exposure to industries exhibiting persistent relative weakness.