Key Momentum Shifts

  • Utilities (XUJ) remain the only sector in the Leading quadrant, confirming continued relative strength and positive momentum despite only modest price gains during the session.
  • Real Estate (XJR) and Communication Services (XSJ) continue advancing within the Improving quadrant, approaching the Leading quadrant but not yet completing the rotation.
  • Information Technology (XIJ) remains in the Improving quadrant, supported by exceptionally strong price performance, signalling further improvement in relative momentum.
  • Materials (XMJ), Consumer Discretionary (XPJ), and Industrials (XNJ) continue strengthening within Improving, highlighting broad-based participation across cyclical sectors.
  • Financials (XFJ) and Energy (XEJ) remain in the Weakening quadrant, indicating positive relative strength persists, although momentum continues to deteriorate.
  • Health Care (XHJ), Telecommunication Services (XTJ), and Consumer Staples (XDJ) remain in the Lagging quadrant, despite strong absolute gains in Health Care during the latest trading session.
  • Sector rotation remains constructive, with improving momentum becoming increasingly widespread while Utilities continue to lead the market.

The latest Relative Rotation Graph (RRG) for 5 August 2026 shows Australian sector leadership remains broadly constructive. Utilities continue to occupy the Leading quadrant, while several economically sensitive sectors, including Information Technology, Materials, Real Estate, Consumer Discretionary and Industrials, continue building momentum within Improving. Meanwhile, Financials and Energy remain in Weakening, and several defensive sectors continue to lag despite recent price rebounds.

Momentum Breakdown by Quadrant

ASX Sector Relative Momentum Chart (at the closing price of 05/08/2026). Powered by: amibroker.com.

Leading Quadrant

  • Utilities (XUJ) remain firmly positioned within the Leading quadrant, continuing to exhibit superior relative strength and positive momentum. Although the sector recorded only a marginal gain during the latest session, its leadership remains intact.

Improving Quadrant

  • Information Technology (XIJ) remains in the Improving quadrant and continues to strengthen after delivering the market's strongest daily performance. Sustained relative momentum could see the sector rotate into Leading over the coming sessions.
  • Materials (XMJ) continue strengthening within Improving, reflecting improving momentum across mining and resource stocks.
  • Consumer Discretionary (XPJ) remains comfortably positioned in Improving, highlighting strengthening investor confidence in consumer-related companies.
  • Real Estate (XJR) continues advancing within Improving and is approaching the Leading quadrant as property stocks maintain positive relative momentum.
  • Communication Services (XSJ) also remains in Improving, sitting close to the Leading boundary as relative performance steadily improves.
  • Industrials (XNJ) continue strengthening within Improving, suggesting economically sensitive businesses are maintaining favourable momentum.

Weakening Quadrant

  • Financials (XFJ) remain in the Weakening quadrant. Australia's major banks continue to display relatively strong performance, although momentum remains under pressure as institutional buying becomes increasingly selective.
  • Energy (XEJ) also remains in Weakening after extending its loss of momentum. Despite previously outperforming the broader market, relative momentum continues to soften.

Lagging Quadrant

  • Health Care (XHJ) remains in the Lagging quadrant despite posting one of the strongest price gains during the latest trading session. The strong rebound has yet to translate into sustained relative momentum.
  • Telecommunication Services (XTJ) continues to occupy Lagging, although its trajectory suggests gradual improvement that could eventually lead to a rotation into Improving.
  • Consumer Staples (XDJ) also remains in Lagging, with investors continuing to monitor for stronger relative momentum before a meaningful rotation can occur.

Strategic Summary

The latest Relative Rotation Graph indicates that Utilities (XUJ) remain the Australian market's sole sector in the Leading quadrant, reinforcing their position as the strongest relative performer. Meanwhile, Information Technology (XIJ), Materials (XMJ), Consumer Discretionary (XPJ), Real Estate (XJR), Communication Services (XSJ), and Industrials (XNJ) continue strengthening within the Improving quadrant, highlighting expanding momentum across both growth and cyclical sectors.

At the same time, Financials (XFJ) and Energy (XEJ) remain in the Weakening quadrant, reflecting fading momentum despite maintaining above-average relative strength. Health Care (XHJ), Telecommunication Services (XTJ), and Consumer Staples (XDJ) continue to underperform in the Lagging quadrant. Overall, the latest sector rotation suggests institutional capital continues to favour sectors exhibiting improving momentum, while Utilities retain market leadership and several Improving sectors appear well positioned to challenge for leadership in the sessions ahead.