The Dow Jones industrial average continued its decline this week, and is not far off entering a bear market, while the Nasdaq and S&P500 are officially in bear territory.
The latter have each registered declines of more than 20% in the past six months, making them bear rather than simply bearish markets.
So why hasn’t the FTSE100 on the other side of the pound had the same misfortune?
“The FTSE100, by contrast, has held up relatively well compared to many of its global peers,” said Richard Hunter, head of markets at investment service Interactive Investor.
Indeed, the premium listing in London has taken a knock of just 1.98% in six months.
Hunter said that in its favour, the constituents of the premium index of UK companies includes defensive and inflation-proof stocks.
Although the index’s winning streak may have faltered slightly, Hunter said: “Its attractions nonetheless remain intact for international investors, with its constituents including a host of defensive and inflation-proof stocks, allied to a generous average dividend yield and an undemanding overall valuation.”
The FTSE100 is extremely selective. Companies that fail to meet share price expectations get booted out in the index’s quarterly reshuffle.
Some of its top companies, including BAE Systems PLC (LSE:BA.) and some of the assets held by defence businesses such as Babcock International, are also ringfenced by the government through golden shares, providing some reassurance for investors in times of downturn.
There is also the fact that the FTSE100 is a much smaller list than the S&P500.
When taken from a wider-angle lens, the UK market could well be on track to follow through with the stock deterioration seen in the US in the coming months.
Sterling has faltered against the dollar this year, dropping 9.2% against the US dollar for the year to date.
The FTSE250 index is very close to being declared a bear market as it copes with a fall in the cumulative value of its stocks.
“The FTSE250 index has lost 19% this year, with sterling also weakening in tandem with deteriorating economic prospects,” Hunter said.
Both the US and UK are facing rising levels of inflation and interest rates, though the US is also tackling slightly greater levels of unemployment and is on the brink of a possible recession.
Market leaders such as Tesla, which saw its stock depreciate by more than 23% in the past six months, have faced significant headwinds.
Tesla’s share price has been eroded following scandals at its factories in Fremont including widespread allegations of racism, Elon Musk shooting from the hip once more in his proposed acquisition of Twitter, and a downgrade to its S&P environmental, social and governance ranking.
Substantial market risks still remain for US companies. The Fed Reserve reiterated this week that these stem from uncertainty around the Russia-Ukraine war and the possibility of a sharp slowdown in China.
Fed Reserve officials have voiced significant determination to keep a lid on inflation amid concerns of a slowdown in global growth.
“The general sense of despondency has rattled US markets in the year to date, with the Dow Jones having fallen 18%, the S&P500 23% and the Nasdaq 30%,” said Hunter.
On the other side of the Atlantic, that gloom has yet to manifest itself in the FTSE 100 but consumer confidence is weakening and the housing market cooling as central banks are also raising interest rates.
Recent profit warnings among retailers suggest inflationary pressure on consumers is having a knock-on effect on their earnings, which could translate into pressure on UK stocks.
Even with FTSE 100's heavy overseas presence, caution remains the watchword.