ASX 200 Market Outlook: Healthcare Rebound Mixed for CSL, PME, SHL

The ASX 200 found some footing on Tuesday after Monday’s shaky start, but conviction remains low with the index still trading under its 200-day average. Sector breadth was mixed and volatility stayed compressed, hinting at indecision ahead of the key December period. Healthcare led the improvement last week, yet its rebound remains patchy, with CSL, PME and SHL moving in different directions. With seasonality set to become more supportive from mid-December, traders will be watching whether this week brings follow-through or a renewed slip in momentum.

View related analysis:

Healthcare Rebound Remains Mixed

ASX 200 Market Snapshot

The Australian share market stabilised on Tuesday after a shaky start to the month.
A bullish inside day and a potential inverted hammer formed, although the ASX 200 cash index remains below its 200-day SMA (5891.8).
The narrow trading range — the smallest in 11 weeks — also highlights a lack of conviction from both sides.
Near-term risks still tilt lower following last week’s swing high, but as discussed in Tuesday’s report, the seasonal case for a Santa rally strengthens from mid-December.
Six of eleven ASX sectors finished lower, led by Information Technology (XIJ) and Utilities (XUJ). Energy (XEJ) and Materials (XMJ) outperformed on the day.
Financials (XFJ) saw selling pressure ease, and CBA continues to hold above 150 and its 20-month EMA — a key level for broader ASX sentiment.

Chart analysis by Matt Simpson - source: ASX, LSEG

ASX 200 Correlations

The 10-day correlation between the financials index and the broader market is effectively zero at -0.11, suggesting the 150 level on CBA may not carry the same weight it once did.
Materials remain well-aligned with the index over the 10-day lookback at 0.73.
Broader risk correlations stay firm, with the ASX 200 tracking closely with the DAX (0.93), Nikkei (0.91) and S&P 500 (0.87).

Chart analysis by Matt Simpson - source: ASX, LSEG

ASX 200 Healthcare (XHJ) Rebound Could be Limited

The healthcare sector (XHJ) posted its best week in eight after finding support above the 2023 low. Near-term oversold conditions helped, but the broader bearish backdrop remains. XHJ has now retraced around half of last week’s bullish engulfing candle, so the next few sessions will show whether buyers can build on this. Seasonality could lend support in the second half of December, but the sector may struggle unless key constituents start to turn higher.

ASX 200 Healthcare sector (XHJ) chart with CSL, Pro Medicus (PME) and Sonic Healthcare (SHL) technical analysis showing bearish trends, key EMAs, swing-high signals and potential SHL breakout – source: TradingView.

Chart analysis by Matt Simpson - source: ASX, LSEG

CSL Retains a Bearish Bias

CSL, the sector heavyweight, remains structurally bearish. The recovery from the October low still looks corrective, with price capped below the September low and the 50-day EMA. Bears will be watching for momentum to roll over towards the 160 target, near the November 2018 low (158.43). A break above 190 would imply a deeper retracement, but the downside target stays intact unless the broader trend changes.

Pro Medicus (PME) Hints at Swing High

PME remains in a downtrend, and Monday produced a bearish engulfing candle around the 50-day and 200-day EMAs — a pattern that often precedes a swing high.

Sonic Healthcare (SHL)

SHL is the only major healthcare name showing early signs of potential outperformance. After a multi-week consolidation, price broke above $22 before forming a bull flag. Momentum extended on Tuesday, hinting at a breakout. Bulls will want to see a clean move above the April low (23.76) and the 200-day EMA (~24) to confirm the trend shift.

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.