S&P/ASX 200 (XJO) – Overview & Price Forecast

The ASX 200, also known as the S&P/ASX 200 or XJO, is a major stock market index that tracks the performance of the 200 largest companies on the Australian Securities Exchange (ASX). The index is considered the primary benchmark for Australian equities and is regarded as the most accurate measure of the Australian stock market’s health.

ASX 200 Chart & Latest

The ASX 200 is a free-float market capitalisation-weighted index listed on the Australian Stock Exchange.

It covers a range of sectors, including financials, materials, healthcare, and consumer goods. Despite being narrower in focus than the All Ords (XAO), the XJO index covers approximately 80% of the Australian share market’s capitalisation, making it a valuable tool for gauging the country’s economic performance.

Like most global indices, the COVID-19 pandemic resulted in an initial plunge in the ASX 200 before it began to rally. Between 2021 and 2023, the index somewhat ranged, while in 2024, it made strong gains, reaching new all-time highs.

Despite various challenges, the index has shown resilience and is up more than 9% for the year-to-date (at the time of writing).

ASX 200 Price Forecast

The ASX 200 Index represents both opportunities and risks for investors, given its sensitivity to the broader economic environment in Australia and the Asia-Pacific region.

Bull Argument: The ASX 200 includes some of the strongest and most profitable companies in Australia, many of which have global operations, particularly in the resources sector. The strong rise in 2024 has caused some analysts and investors to raise questions about valuations. However, Wilsons Advisory strategist Greg Burke recently stated that “the areas of the ASX that are offering attractive earnings growth are justifiably being afforded a valuation premium in the current environment.”

Meanwhile, investment bank Morgan Stanley said in May 2024 that it expected the ASX 200 to extend its record-breaking run over the next year, citing a rebound in corporate earnings and the Reserve Bank of Australia cutting interest rates. The bank’s “bull case” was 8700. 

Bear Argument: However, the ASX 200 is not without its challenges, and there are some who believe it is now overvalued. In late October, Matt Simpson, a market analyst at Forex.com, said that a “potential head and shoulders top is forming on the ASX 200 daily chart,” which would project a downside target of around 7900 if successful. He added that it will “likely then be down to global macro headwinds as to whether we see a break beneath 8130.” As a result, Simpson said investors with a bearish view may prefer to wait and see how the price reacts around the 8100 and 8000 levels.

Who Should Buy the ASX 200?

The ASX 200 offers an investment opportunity that may appeal to a range of investors seeking exposure to Australia’s largest and most stable companies:

Australian Market Bulls: Investors confident in Australia’s long-term economic prospects and business growth may find ETFs that track the index as an attractive investment opportunity, given it provides exposure to leading companies on the ASX.

Resource Sector Enthusiasts: With significant representation from resource and mining companies, the ASX 200 is appealing to those who are optimistic about commodities.

Income Seekers: Many companies in the ASX 200 are known for their strong dividend payouts, making it attractive for investors looking for regular income.

Risk Tolerance: While the index offers access to established companies, it is also influenced by broader economic and commodity cycles, so a moderate risk tolerance is advisable. However, given the recent valuation concerns, investors may want to assess whether the current valuation is warranted.

Timeframe: The ASX 200 suits long-term investors who believe in the resilience of the Australian economy, but it can also provide shorter-term opportunities for those looking to trade based on sector-specific trends.

ASX 200 Top 10 Companies 

The ASX 200 (XJO) announces changes to the ASX 200 once every quarter, usually in March, June, September and December.

Some S&P/ASX 200 index-linked ETFs include the intelligent Investor AUS Eq Inc ETF, the iShares Core S&P/ASX 200 ETF, and the Lyxor Australia (S&P/ASX 200) ETF D EUR.