The S&P/ASX 200 Index (ASX: XJO) has hovered around an all-time high since August, when it peaked at 9054.50 points. At the time of writing, the index is just 0.5% below its peak at 9,005.60.
The latest index movements have led many investors to question whether stocks will end 2025 even higher and surpass the all-time peak or whether we can expect some type of sell-off over the next 2.5 months.
There is no crystal ball to predict exactly what will happen at the end of the year, but there are a handful of key signals that might indicate which way the pendulum will swing.
Here are three things to watch out for.
1. Earnings & profit growth
The ASX needs strong corporate earnings to support an upward trajectory. If key stocks such as major banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation (ASX: WBC), mining giants, and other large-cap companies like CSL Limited (ASX: CSL) and Wesfarmers Ltd (ASX: WES) deliver strong forecasts and earnings, it will help fuel a sustained rise across the index.
After all, stocks are valued (or supposed to be valued) as the sum total of their future projected cash flows. So if revenue growth exceeds expectations and cost pressures reduce, this is positive for the index as a whole. And if earnings stagnate or are even revised downwards, weak support means it'll be even harder for the index to reach an all-time high by the end of the year.
2. Interest rate movements
Investors and market players should keep a close eye on the Reserve Bank's interest rate movements because any changes will directly affect the ASX 200 Index.
After all, when interest rates rise, stock valuations tend to fall, and when interest rates fall, the opposite happens.
Also, lower interest rates mean it's cheaper for companies and individuals to borrow, which supports earnings and consumer spending growth. Interest rate cuts also boost overall market confidence.
The Reserve Bank has cut interest rates three times in 2025, with two more meetings scheduled for the remainder of the year. Many eyes are watching to see what the Reserve Bank will do, with many economists expecting another cut by the end of the year.
Three of the big four banks updated their cash rate predictions this month. Westpac is the only major bank that predicts a cut this year in November.
3. Commodity price movements
The ASX 200 is heavily weighted towards commodity stocks. Mining giants like BHP Group Ltd (ASX: BHP), Newmont Corporation Ltd (ASX: NEM), and Fortescue Ltd (ASX: FMG) make up a significant portion of the ASX 200 by market cap.
Given that their share prices are closely linked with commodity prices, any significant fluctuation will affect the index as a whole.
For example, the ASX 200's spike to an all-time high in August was supported by a number of factors. One of which was the strengthening of the prices of copper and iron ore. These are the two materials mined by giants BHP and Newmont.
Any shift in commodity prices would almost certainly play a crucial role in index movement throughout the end of the year.
So, what are the chances the ASX 200 will end 2025 higher than ever?
I think there's a reasonable chance the ASX could end 2025 near or even slightly above prior highs. But it does depend on earnings results, interest rate movements, and commodity prices over the next 11 weeks.
