ASX Sector Momentum Update: Technology Leads as Energy Enters Lagging

Robert Luong

18 August 2026 09:52 AM AEST

ASX Sector Momentum Update: Technology Leads as Energy Enters Lagging

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Key Momentum Shifts

Information Technology (XIJ), Health Care (XHJ), Materials (XMJ) and Resources (XJR) remain in the Leading quadrant, indicating relatively strong momentum and relative strength.
Utilities (XUJ) remains in the Improving quadrant, signalling continued recovery in relative momentum.
Energy (XEJ) has moved into the Lagging quadrant, marking the latest deterioration in sector momentum.
Financials (XFJ), Consumer Discretionary (XDJ), Real Estate (XPJ), Communication Services (XTJ), Consumer Staples (XSJ) and Industrials (XNJ) remain in Lagging.
Seven sectors are now positioned in Lagging, while no sectors currently occupy the Weakening quadrant.

The latest Relative Rotation Graph (RRG) for 17 August 2026 indicates that sector momentum across the Australian Equity market remains highly selective. Information Technology (XIJ), Health Care (XHJ), Materials (XMJ) and Resources (XJR) continue to occupy the Leading quadrant, maintaining their positions as the primary sources of relative strength.

The most notable change is the movement of Energy (XEJ) from Weakening into Lagging. Utilities (XUJ) remains the only sector in Improving, while seven sectors are now positioned in Lagging. The updated RRG therefore points to concentrated Leadership and relatively weak momentum breadth.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 17/08/2026). Powered by: amibroker.com.

Leading Quadrant

The presence of four sectors in Leading indicates that Technology, Health Care, Materials and Resources continue to represent the principal sources of relative strength in the Australian equity market.

Information Technology (XIJ) remains the strongest sector on the chart, positioned well into the Leading quadrant. Health Care (XHJ) also maintains strong relative strength, while Materials (XMJ) and Resources (XJR) remain firmly positioned in Leading.

The continued leadership of these four sectors suggests that the strongest momentum remains concentrated within a relatively small group rather than being broadly distributed across the market.

Improving Quadrant

Utilities (XUJ) remains the only sector in the Improving quadrant, indicating that its relative momentum continues to recover from a weaker position.

If XUJ continues to move upward and to the right on the RRG, it could eventually challenge the Leading quadrant. However, further improvement in both relative strength and momentum would be required to confirm a sustained transition.

The lack of additional sectors in Improving highlights the limited breadth of the current momentum recovery.

Weakening Quadrant

There are currently no sectors in the Weakening quadrant.

This represents a notable change from the previous RRG, when Energy (XEJ) occupied Weakening. Its movement into Lagging indicates that relative momentum has deteriorated further rather than stabilising.

Lagging Quadrant

Seven sectors are now positioned in Lagging: Energy (XEJ), Financials (XFJ), Consumer Discretionary (XDJ), Real Estate (XPJ), Communication Services (XTJ), Consumer Staples (XSJ) and Industrials (XNJ).

Energy's transition into Lagging is the most important negative momentum shift in the latest RRG. The move indicates that its relative momentum has weakened sufficiently to move below the Lagging boundary.

The concentration of seven sectors in Lagging continues to highlight the weakness in market breadth. Although several sectors remain relatively close to the centre of the RRG, their current positions indicate weaker relative momentum compared with the Leading group.

Strategic Summary

The latest RRG shows that ASX sector momentum remains highly concentrated. Information Technology, Health Care, Materials and Resources continue to lead, while Utilities is the only sector showing improving momentum.

The move of Energy into Lagging is the key negative shift, increasing the number of Lagging sectors to seven. At the same time, the absence of sectors in Weakening suggests that the current rotation is concentrated between Leading, Improving and Lagging rather than showing a broad transition from Leading into Weakening.

Technology remains the strongest leader, while sustained improvement in Utilities and further moves from Lagging into Improving would provide stronger evidence of a broader recovery in sector momentum.

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