By Akane Otani and Anna Hirtenstein 

Stocks around the world are set to close out one of their best years over the past decade, defying money managers who began 2019 expecting threats from the U.S.-China trade fight to slowing growth to upend the bull market.

Just 12 months ago, the mood was far dimmer. The global economy was weakening; stocks, bonds and commodities were falling in tandem; and money managers worried the Federal Reserve's interest-rate increases would turn an economic slowdown into a protracted downturn.

Fast forward to the final day of the decade, and stock indexes from the U.S. to Brazil to Germany are up more than 20% apiece for the year. While prior such runs have been met by skepticism, this time, few see the rally ending soon.

The Dow Jones Industrial Average's more than 170% rise from 2010 to 2020 ranks as just the fourth-best decadelong performance in the past 100 years -- a gain that, while respectable, doesn't conjure the fear of excess that rallies in the 80s and 90s did. Many investment banks are forecasting solid, if modest gains for the coming year, citing major central banks' easy-money policies, a resilient U.S. economy and a breakthrough in trade talks between Washington and Beijing.

BMO Capital Markets and Goldman Sachs estimate the S&P 500 will end 2020 at 3400, about 6% above where the index closed Monday, while Citigroup and Bank of America have put their target at 3300.

On the final trading day of the year, the S&P 500 edged down 0.2%, while the Dow Jones Industrial Average fell 0.2% and the Nasdaq Composite lost 0.3%. All three indexes are up more than 20% for the year.

The Stoxx Europe 600 hovered near its all-time high and was on course for its biggest one-year gain since 2009, while in Asia, the Shanghai Composite finished the year up 22% for its best showing since 2014.

Hong Kong's shares lagged behind global indexes, with the Hang Seng ending the year up just 9% after months of clashes between antigovernment demonstrations and police.

"Despite a tricky macro backdrop, it's been a very, very good year for global markets," said Emma Wall, head of investment analysis at Hargreaves Lansdown.

Many say it's difficult to pinpoint what exactly could trip up the rally in 2020.

There are a number of uncertainties that investors say they will be watching: the U.S. and China haven't finalized a trade deal yet, the U.K. is set to leave the European Union at the end of January and President Trump faces reelection next November.

The global economy has also cooled, with factory activity in particular taking a hit around the world this year.

But the level of anxiety that investors say they have about each of these threats seems far more subdued than was the case a year ago.

"The headwinds we experienced earlier in 2019 from the trade wars and potential problems with Brexit -- those headwinds have diminished sharply," said Chris Rupkey, chief financial economist and managing director at MUFG.

Adding to that, fears of a recession in the U.S. have eased, thanks to a resilient labor market and signs of solid consumer spending.

Economists surveyed by The Wall Street Journal are forecasting the economy will grow around 1.8% in 2020, which would mark a slowdown from prior years but nevertheless extend the longest economic expansion in U.S. history.

"Now that the coast is looking a little bit more clear for the economy, I think it's okay to embrace risk here at this stage," Mr. Rupkey said.

Part of what made 2019 remarkable for investors was that gains were strong across stocks, bonds and key commodities, such as oil and gold. Vanguard's Total Bond Market ETF, for instance, which owns a broad collection of government and corporate bonds, returned 8.9% for investors.

Gold edged up Tuesday and was up around 19% for 2019, headed toward its best year since 2010.

Write to Akane Otani at akane.otani@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

December 31, 2019 09:52 ET (14:52 GMT)

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