Key Momentum Shifts

  • Utilities (XUJ), Energy (XEJ), and Telecommunication Services (XTJ) now occupy the Leading quadrant, indicating these sectors are demonstrating both superior relative strength and positive momentum. Utilities continue strengthening within the quadrant, while Telecommunication Services has successfully rotated into leadership.
  • Materials (XMJ), Real Estate (XJR), Consumer Discretionary (XPJ), and Industrials (XNJ) remain in the Improving quadrant, highlighting continued strengthening in relative momentum and suggesting these sectors remain candidates to rotate into Leading.
  • Financials (XFJ) continue to reside in the Weakening quadrant, signalling that although the sector still outperforms the broader market on a relative basis, its momentum continues to fade.
  • Consumer Staples (XDJ), Information Technology (XIJ), and Health Care (XHJ) remain in the Lagging quadrant, reflecting persistent relative underperformance despite some early signs of stabilisation in Consumer Staples.
  • Telecommunication Services (XTJ) represents the most notable rotation this week, moving from Improving into the Leading quadrant and confirming strengthening relative performance.
  • Health Care (XHJ) remains the weakest sector on the Relative Rotation Graph, positioned deep within the Lagging quadrant with little evidence of a sustained recovery.
  • The overall RRG continues to favour cyclical and defensive sectors exhibiting improving momentum, while institutional investors remain selective towards sectors showing deteriorating relative strength.

The latest Relative Rotation Graph (RRG) for 3 August 2026 shows the Australian equity market maintaining constructive sector rotation. Utilities continue extending their leadership, while Telecommunication Services has completed a notable rotation into the Leading quadrant alongside Energy. Meanwhile, Materials, Real Estate, Consumer Discretionary and Industrials remain firmly positioned in Improving, suggesting momentum continues to build across several sectors. In contrast, Financials remain in Weakening, while Consumer Staples, Information Technology and Health Care continue to lag the broader market. Overall, sector rotation continues to favour industries displaying improving relative momentum and sustained institutional buying.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 03/08/2026). Powered by: amibroker.com.

Leading Quadrant

  • Utilities (XUJ) continue strengthening within the Leading quadrant, reinforcing the sector's position as one of the strongest relative performers. Its trajectory suggests investors continue favouring defensive, income-generating stocks.
  • Energy (XEJ) remains firmly established in Leading despite its path beginning to flatten. Although momentum has moderated, the sector continues to exhibit superior relative strength versus the broader market.
  • Telecommunication Services (XTJ) has rotated into the Leading quadrant, representing one of the most significant developments in the latest RRG. The move confirms strengthening relative strength and momentum following several weeks of improvement.

Improving Quadrant

  • Materials (XMJ) remain comfortably within the Improving quadrant, with their positive trajectory suggesting mining and resource stocks continue building relative momentum. Continued strength could see the sector rotate into Leading in coming sessions.
  • Real Estate (XJR) continues to strengthen within Improving as investors maintain exposure to interest rate-sensitive property stocks.
  • Consumer Discretionary (XPJ) remains in Improving, indicating investor sentiment towards consumer-related companies continues to recover.
  • Industrials (XNJ) continue advancing within Improving, suggesting economically sensitive businesses are gradually regaining relative strength following earlier weakness.

Weakening Quadrant

  • Financials (XFJ) remain the only sector in the Weakening quadrant. Although Australia's major banks continue to outperform on a relative basis, the declining momentum suggests institutional investors have become increasingly selective towards financial stocks.

Lagging Quadrant

  • Consumer Staples (XDJ) remain in the Lagging quadrant but appear to be stabilising following recent underperformance. Additional improvements in momentum will be required before the sector can rotate into Improving.
  • Information Technology (XIJ) continues to underperform the broader market despite showing modest signs of stabilisation. Further strengthening in relative momentum will be necessary before a meaningful recovery develops.
  • Health Care (XHJ) remains deep within the Lagging quadrant and continues to be the weakest-performing sector on the RRG. The sector will require a sustained improvement in both momentum and relative strength before signalling a trend reversal.

Strategic Summary

The latest Relative Rotation Graph indicates that Utilities (XUJ), Energy (XEJ), and Telecommunication Services (XTJ) now occupy the Leading quadrant, confirming these sectors as the Australian market's strongest relative performers. Meanwhile, Materials (XMJ), Real Estate (XJR), Consumer Discretionary (XPJ), and Industrials (XNJ) continue strengthening within the Improving quadrant, reinforcing the ongoing rotation towards sectors exhibiting improving momentum.

At the same time, Financials (XFJ) remain in the Weakening quadrant, while Consumer Staples (XDJ), Information Technology (XIJ), and Health Care (XHJ) continue to lag the broader market. Overall, the latest sector rotation suggests institutional capital continues flowing towards sectors demonstrating strengthening relative momentum while avoiding industries that remain persistently weak.