What are stock market sectors?

There are more than 2,000 companies listed on the ASX and one of the ways they are categorised is by industry sector.

GICS (Global Industry Classification Standard) aims at standardising industry definitions.

To bring Australia in line with the rest of the world Standard and Poor’s have reclassified all ASX listed entities according to GICS. These are called GICS sectors.

Sector classification groups companies according to their main business activities, enabling you to look at the whole market and compare companies based on their industry.

The ASX is divided into the following sectors:

• Consumer Discretionary: Companies from a broad range of industries such as media, general retailing and gambling. Examples include JB Hi Fi, Harvey Norman and Crown.
• Consumer Staples: Companies involved in the production and distribution of food and beverages. Examples include Wesfarmers, Goodman Fielder and Woolworths.
• Energy: Explorers and/or producers of energy resources such as oil, gas and renewable energies. Examples include Oil Search, Santos and Woodside Petroleum.
• Financials: Banks, asset managers, insurance companies and other providers of financial services. Examples include Commonwealth Bank, Australian Securities Exchange and National Australia Bank.
• Health Care: Pharmaceuticals, biotechnology, medical practice and pathology companies, as well as junior life sciences and medical device companies. Examples include CSL, Cochlear and Ramsay Health Care.
• Industrials: Companies from a broad range of industries such as construction and engineering, infrastructure, transport and commercial services. Examples include Leighton Holdings, Transurban and Qantas.
• Information Technology: A variety of mainly small to medium-sized businesses, such as IT consultancies and software developers and vendors. Examples include Computershare, IRESS Market Technology and carsales.com.
• Materials: Producers of agricultural commodities, fertilisers, paper and forestry products, chemicals and building materials. Examples include Orica, Amcor and Incitec Pivot.
• Metals/Mining: Many of the world's leading resource companies, along with a growing number of mid-tier producers and exploration companies. Examples include BHP Billiton, Rio Tinto and Fortescue Metals Group.
• Telecommunications Services: Telecommunications carriers, distributors and resellers. Examples include Telecom of New Zealand, iiNet and Telstra.
• Utilities: Major electricity and gas retailers and a number of smaller utility providers. Examples include AGL Energy, SP Ausnet and Spark Infrastructure.
• Real Estate: Companies, investment trusts involved in deriving income solely from commercial, industrial and residential real estate (includes REITs). Examples include Mirvac, Stockland and Westfield.

The ASX provides individual indexes for each of the different sectors so you get a better picture of which sectors have been driving the performance of a broader index like the ASX 200.

Once you identify sectors that are performing well or that you might expect to pick up in the future, you can then explore the companies within the sector and compare their performance and share prices.