ASX Sector Momentum Update: Technology Leads as Industrials Enter Improving

Robert Luong

17 August 2026 09:44 AM AEST

ASX Sector Momentum Update: Technology Leads as Industrials Enter Improving

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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.
Industrials (XNJ) has moved into the Improving quadrant, signalling an early improvement in its relative momentum and a potential shift toward stronger sector leadership.
Energy (XEJ) is positioned in Weakening, indicating that its relative momentum continues to deteriorate.
Financials (XFJ), Consumer Discretionary (XDJ), Real Estate (XPJ), Communication Services (XTJ), Utilities (XUJ) and Consumer Staples (XSJ) remain in the Lagging quadrant.

The latest Relative Rotation Graph (RRG) for 14 August 2026 indicates that sector momentum across the Australian Equity market remains 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 Industrials (XNJ) into the Improving quadrant. This represents an important shift from the previous session, when Industrials remained in Lagging, and suggests that its relative momentum is beginning to recover.

Energy (XEJ) remains the only sector in Weakening, while six sectors remain in Lagging. The updated RRG therefore shows a modest improvement in the breadth of momentum, although Leadership remains concentrated.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 14/08/2026). 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. However, the sharp daily declines in Materials and Resources highlight the importance of distinguishing broader RRG positioning from short-term price performance.

The chart demonstrates this divergence clearly: Materials and Resources remain in Leading even as both experienced substantial one-day declines.

Improving Quadrant

Industrials (XNJ) has entered the Improving quadrant, marking the most important positive momentum shift in the latest RRG.

The transition of Industrials from Lagging to Improving is significant because it suggests that relative momentum is beginning to recover from a weaker position. If the sector continues to move upward and to the right on the RRG, it could eventually challenge the Leading quadrant.

This development also provides an early indication that sector participation may be broadening beyond the established leaders. However, confirmation would require continued improvement in Industrials' relative strength and momentum.

Weakening Quadrant

Energy (XEJ) remains the only sector positioned in Weakening, indicating that its relative momentum continues to deteriorate.

Energy's position remains important because it sits between the Leading and Lagging groups. A sustained improvement in its trajectory could return the sector toward stronger momentum, while continued deterioration could push it into Lagging.

Lagging Quadrant

Communication Services (XTJ) remains close to the centre but is still positioned in Lagging, finishing unchanged.

The concentration of six sectors in Lagging continues to represent the weaker portion of the current RRG structure. However, the reduction from seven Lagging sectors to six, together with Industrials entering Improving, represents a modest improvement in the overall momentum structure.

The contrast between daily performance and RRG positioning remains important. Utilities, Consumer Staples and Communication Services did not experience severe daily losses, yet their broader relative momentum remains weaker than the Leading group.

Strategic Summary

The latest RRG shows selective but slightly improving sector momentum. Information Technology, Health Care, Materials and Resources remain in Leading, while Industrials (XNJ) has moved into Improving, marking the key positive momentum shift.

Energy remains in Weakening, while six sectors stay in Lagging. Technology remains the strongest leader, while continued improvement in Industrials and further moves from Lagging into Improving would provide stronger evidence of a broader market recovery.

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