Dawn Chorus: Stock markets face key reports after dismal week

After declining for the third week in a row, the US and European stock markets will enter into September facing key reports on jobs, manufacturing and services.

The S&P 500 ended last week down 0.7% at 1,064, while the Dow Jones Industrial Average fell 63 points, or 0.6%, to 10,150, extending its decline to 3% this month. The Nasdaq gave up 1.2%.

August US payrolls due out on Friday are likely to add to a gloomy prognosis. According to Reuters, economists polled forecast an August drop of 99,000 non-farm jobs after a decline of 131,000 in July.

On Wednesday, Institute for Supply Management data will show whether the slowdown has affected the manufacturing sector. It is being expected that the factory sector would provide enough strength to overcome the dismal consumer and housing sectors.

Auto sales data also on Wednesday will offer another measure of consumer demand. On the same day, the Fed will release minutes of its August policy meeting, shedding light on the central bank's options to increase quantitative easing.

Quarterly earnings reports scheduled for this week include Campbell Soup Co., H&R Block Inc., Brown-Forman Corp. and H.J. Heinz Co.

In Europe, stocks will get a booster this week as the European Central Bank is likely to extend its unlimited liquidity provisions. The ECB is also expected to upgrade forecasts for overall European growth.

European shares fell for a third week on concern that the US economy is stalling. The Stoxx Europe 600 Index slipped 0.4% to 251 last week. Germany’s DAX lost 0.9% and France’s CAC 40 slid 0.5%, while the UK’s FTSE 100 gained 0.1%.

In Asia, Japan’s Nikkei will set the tone for the region this week as it is likely to gain on Monday after revised second quarter US GDP was less gloomy than expected, and as the yen fell after the Bank of Japan said it would hold an emergency policy meeting.

Last week, Asian stocks fell amid concerns global recovery is faltering. The MSCI Asia Pacific Index dropped 1.2%, while Nikkei slumped 2.1%. The Shanghai Composite Index declined 1.2% and Australia’s S&P/ASX 200 Index dropped 1.4%.