UK seen posting another strong growth reading

Good morning,

• Market jitters continues as investors panic on reports of new Ebola case in the US;

• EU bank stress test results this weekend may prompt some risk aversion today;

• UK seen posting another strong growth reading;

• German consumer confidence expected to fall to nine month low.

The markets look set to end the week on a slightly more downbeat note, with European indices seen opening around half a percentage point lower, tracking moves in the US overnight where indices pulled back late in the session, apparently in response to reports of a new Ebola case in New York.

As I've said repeatedly in the last couple of weeks, I am not convinced in the slightest that these market moves reflect investor concerns over the spread of Ebola. Market jitters reflect the fact that investors are on edge at the moment and the spread of Ebola is just an excuse. That's not to say we didn't see profit taking yesterday shortly after these reports emerged, what it does say is that investors are looking for any reason to get out of their long positions, or even short the market, which is concerning.

The fact of the matter is, only one person in the US has died from Ebola and therefore any genuine market panic attributed to it spreading is just nonsense in my opinion. As far as I'm concerned, the fact that we've retraced around two thirds of the move from September highs to last week's lows and run into technical resistance around the 100-day SMA in the S&P 500 better explains the profit taking.

One more thing that could explain a more cautious approach from traders today is the fact that results from the bank stress tests are due to be released over the weekend which could have a massive impact on next week's opening levels. There have been rumours that 11 banks from six countries have failed the stress tests but these haven't been confirmed by the ECB.

There's just so much potential for disappointment from this report that I believe investors will be a little more risk averse today, particularly as we approach the close. Even if most banks pass, a large bank failing the test could be enough to raise contagion fears again. This is also true if one of the banks at the core fail, such as in Germany or France where the banking system is perceived to be in much better shape than in the periphery.

The first reading of UK third quarter GDP will be released this morning and is expected to show the country grew by 0.7%. This would be another strong figure for the UK, especially at a time when most of the rest of the world appears to be experiencing a slowdown, particularly the eurozone which is once again stagnating. We have already been warned that this could impact growth in the UK due to it being its largest trading partner, although as of yet we're seeing few signs of it. Growth for the year is expected to be 3%, which is again the kind of growth many other countries in Europe could only dream of right now.

Also being released this morning is the Gfk consumer confidence survey. While the consumer is less important to the German economy than it is to the US or the UK, many people believe that in order to see growth return in the euro area, we need to see German consumers spending more. Not only would this boost economic activity in Germany itself, it would also, in theory, mean Germany importing more goods from other eurozone countries, thereby benefiting their economies as well. The only problem is that for this to happen, we may need to see more wage growth in Germany which doesn't appear to be happening yet. The Gfk reading is expected to fall to the lowest level since January this morning which doesn't give with much hope that the German consumer driven recovery is on the horizon just yet.

The FTSE is expected to open 25 points lower, the CAC 26 points lower and the DAX 34 points lower.