S&P/ASX Healthcare Index Falls ~7% in March Amid Middle East Conflict
The S&P/ASX Healthcare Index experienced a significant decline of approximately 7% in March, mirroring the broader S&P/ASX 200’s drop of 7.15%. This downturn was largely attributed to the fallout from the ongoing conflict in the Middle East, which has led to soaring energy prices, rising bond yields, and a slump in equities globally. Australian investors have also been grappling with increasing interest rates, as the Reserve Bank of Australia raised the cash rate by 25 basis points to 4.10% during its March meeting—marking the second increase of 2026.
The central bank signaled that further tightening may be necessary if inflation does not ease, despite the latest Australian Bureau of Statistics data showing the Consumer Price Index rose 3.7% in February. This figure remains above the central bank’s 2-3% target band, and the pre-war context is expected to add more pressure on inflation.
The ASX healthcare sector, which had already dropped around 25% in 2025, fell an additional 30.25% year-to-date in 2026, making it the second biggest laggard behind technology.
Lack of Broad-Based Risk Appetite for Healthcare
Morgans healthcare analyst Iain Wilkie noted that sentiment remained weak throughout March, driven by macroeconomic shocks and a continuation of the risk-off environment. He highlighted that the focus was more on long-dated growth stories rather than stock-specific de-ratings or earnings-related disappointments.
Wilkie pointed out that large-cap healthcare stocks were a drag on the sector, with CSL (ASX:CSL), a leading blood products and vaccine company, being a key contributor to the weakness. CSL continued to fall due to softer H1 FY26 earnings and lingering uncertainty around near-term growth and execution.
He explained that while there were no fundamental changes in March, CSL’s continued reset lower weighed heavily on index performance and investor sentiment toward healthcare more broadly.
“Broadly, there was a clear lack of broad-based risk appetite for healthcare,” he said.
Wilkie added that higher-multiple names and earlier-stage biotechs struggled, with investors becoming highly selective and prioritizing balance-sheet strength and near-term revenue visibility in the face of rising rates, inflation, and heightened risk.
“Performance wasn’t universally negative though,” he said.
“A handful of small-cap names outperformed on very specific company catalysts, particularly where there was tangible progress on commercialisation or regulatory milestones.”
Wilkie cited Lumos Diagnostics (ASX:LDX) as an example, noting positive momentum driven by US execution and regulatory developments. However, these moves were not enough to offset broader sector weakness.
“Overall, I’d characterise March as one where sentiment remained cautious and conviction stayed low,” he said.
“Investors continue to reward delivery and near-term cash flows, but there’s little tolerance for uncertainty, and large-cap weakness has set the tone for the sector.
“Until earnings risk clears or the macro backdrop becomes more supportive of growth defensives, healthcare is likely to remain a stock-picker’s market rather than a sector call.”
How ASX Healthcare Companies Performed in March
Below is a list of some of the top-performing and underperforming healthcare companies on the ASX in March:
Top Performers:
- Amplia Therapeutics (ASX:ATX): Surged ~96% after reporting four new confirmed responses from its Phase Ib/IIa pancreatic cancer trial.
- SDI Limited (ASX:SDI): Rose 40.7% in March.
- 4D Medical Limited (ASX:4DX): Gained 39% following several positive announcements, including European clearance for its CT:VQ tool.
- Telix Pharmaceutical (ASX:TLX): Increased by 36.6% in March.
- Heramed Limited (ASX:HMD): Rose 31.6% in March.
Notable Underperformers:
- CSL Limited (ASX:CSL): Dropped 2.8%, despite being a major player in the sector.
- Ramsay Health Care (ASX:RHC): Fell 8.4%.
- ResMed Inc. (ASX:RMD): Declined 10.8%.
- Cochlear Limited (ASX:COH): Slumped 13.9%.
- Immutep Ltd (ASX:IMM): Plunged 87.8%.
Other notable performers included Optiscan Imaging (ASX:OIL), which rose 23.5% after submitting a regulatory dossier to the US FDA’s Centre for Veterinary Medicine for its InSpecta microscopic imaging device.
Standout Stocks Defy Sector Decline
While the overall healthcare sector faced challenges, several stocks managed to defy the downward trend. Amplia Therapeutics stood out, with its shares surging over 96% in March after reporting four new confirmed responses in its pancreatic cancer trial. The company’s CEO, Dr Chris Burns, highlighted the significance of the results, noting an unprecedented 7.8% response rate among 64 patients.
4D Medical also saw strong gains, rising 39% after securing European clearance for its CT:VQ tool and being added to the ASX 300 and All Ordinaries indices.
Optiscan Imaging’s 23.5% rise came after the submission of its regulatory dossier for InSpecta, marking a strategic move into the veterinary market.
Despite the broader sector decline, these standout performances highlight the potential for growth in the healthcare space, even amid challenging macroeconomic conditions.
