Why does the UK stock exchange catch a cold whenever Wall Street sneezes?

Answer 1

Investor confidence (or lack thereof) ..

There may have been some justification historically when a lot of major UK companies were highly exposed to US markets - however these days most UK Companies are more exposed to European market.

However facts have never had anything to do with Beliefs :-)

At the end of the day, ANY Company is ONLY worth what people are willing to pay for it ...

If Investors refuse to see any value in the shares (typically because the Board of Directors are too busy building 'empires' and lining their own pockets) then private equity will buy them out, fire the Directors, break up the 'empire' and sell off as many bits as possible and then bring the 'rump' back to the Stock market at double the price :-)

Answer 2

Because the US is the dog and the UK is the tail.