Key Highlights

• Financials Remain the Strongest Leader: Financials (XLF) continue to occupy one of the most dominant positions within the Leading quadrant, maintaining superior relative strength despite some moderation in momentum.

• Defensive Sectors Continue to Lead: Consumer Staples (XLP), Utilities (XLU), Health Care (XLV), Real Estate (XLRE), and Materials (XLB) remain positioned within the Leading quadrant, reflecting ongoing institutional preference for sectors with stable earnings and defensive characteristics.

• Consumer and Communication Sectors Strengthen Further: Consumer Discretionary (XLY) and Communication Services (XLC) continue advancing within the Improving quadrant, suggesting growing investor confidence and improving relative momentum.

• Technology Remains the Weakest Major Sector: Information Technology (XLK) remains deeply embedded within the Weakening quadrant, highlighting persistent relative weakness following its previous period of market leadership.

• Energy Recovery Continues: Energy (XLE) remains the sole occupant of the Lagging quadrant but continues rotating North-East, indicating a gradual improvement in momentum conditions.

The US sector rotation profile on June 24, 2026, continues to reflect a market characterised by selective risk-taking and broad leadership diversification. While defensive sectors remain firmly entrenched among the market leaders, improving momentum within Consumer Discretionary and Communication Services suggests investors are gradually expanding exposure beyond traditional safe-haven industries. Meanwhile, Technology remains under pressure, while Energy continues its slow recovery from a prolonged period of relative underperformance.

The latest Relative Rotation Graph (RRG) indicates that institutional investors remain focused on sectors demonstrating superior relative strength while closely monitoring emerging leadership candidates that could drive the next phase of market rotation.

US Sector Momentum Summary

The Leading Quadrant (The Market Leaders)

• Financials (XLF) remain one of the strongest sectors on the Relative Rotation Graph. Although momentum has eased slightly from recent peaks, the sector continues to demonstrate exceptional relative strength and remains firmly positioned within the leadership group. The persistence of Financials in the Leading quadrant reflects ongoing confidence in banking profitability, credit conditions, and economic resilience.

• Industrials (XLI) continue to occupy a prominent position within the Leading quadrant. However, the sector's south-west trajectory indicates that momentum is gradually moderating. While Industrials remain a market leader, investors appear to be becoming more selective following a period of sustained outperformance.

• Consumer Staples (XLP) maintain a solid position within the Leading quadrant. Despite some loss of momentum, the sector continues to outperform the broader market and remains a preferred destination for investors seeking earnings stability and defensive exposure.

• Utilities (XLU) remain among the strongest sectors on the chart. The sector continues to benefit from demand for predictable earnings and dividend income, although momentum has begun to soften modestly in recent sessions.

• Materials (XLB) remain within the Leading quadrant but have started rotating south-west. This movement suggests that while relative strength remains positive, investors may be beginning to lock in profits following an extended period of outperformance.

• Health Care (XLV) continues to occupy the Leading quadrant but is displaying one of the more noticeable momentum slowdowns among the leaders. Continued weakness in momentum could eventually place the sector at risk of migrating toward the Weakening quadrant.

• Real Estate (XLRE) remains in the leadership group, although its recent trajectory suggests relative momentum has moderated. Nevertheless, the sector continues to outperform the broader market and retains an overall constructive profile.

The Improving Quadrant (The Emerging Leadership Candidates)

• Consumer Discretionary (XLY) continues to strengthen within the Improving quadrant. Its north-east trajectory highlights improving relative momentum and suggests the sector is becoming an increasingly attractive candidate for future market leadership. Continued improvement in consumer sentiment and spending expectations could further support this rotation.

• Communication Services (XLC) also remains firmly positioned within the Improving quadrant. Relative momentum continues to strengthen, indicating growing investor interest in communication and media-related businesses. If current trends persist, the sector may eventually transition into the Leading quadrant.

The Weakening Quadrant (Losing Leadership)

• Information Technology (XLK) remains deeply embedded within the Weakening quadrant. Although the sector has shown some improvement in momentum compared with earlier periods, relative strength remains significantly weaker than most other sectors. The sector's position suggests institutional investors continue reallocating capital toward areas with stronger near-term momentum characteristics.

The Lagging Quadrant (Structural Underperformers)

• Energy (XLE) remains the market's only sector within the Lagging quadrant. However, unlike previous months, the sector continues to rotate steadily north-east, indicating that relative momentum is improving. While Energy remains a relative underperformer, the current trajectory suggests the sector may be entering the early stages of a broader recovery process.

Strategic Summary

The latest RRG configuration continues to favour Financials and a range of defensive sectors, including Consumer Staples, Utilities, Health Care, and Real Estate. These sectors remain the primary market leaders, supported by strong relative strength and ongoing institutional demand.

At the same time, Consumer Discretionary and Communication Services are displaying some of the strongest momentum improvements on the chart, positioning them as the most likely candidates for future leadership. The continued weakness in Technology remains a notable headwind for growth-oriented investors, while Energy's gradual recovery warrants close monitoring.

Overall, the current sector rotation profile suggests investors remain focused on a balanced combination of defensive leadership and selective cyclical opportunities, with market participation gradually broadening beyond traditional safe-haven sectors.