Most Asian stock markets ended on a negative note last week as the weak fiscal reports from the major economies and the China-Japan tensions weighed on the sentiment.

Japanese trade deficit widened in August and Chinese manufacturing activity continued to contract for the 11th straight month while a disappointing survey of New York manufacturers and concerns over the euro zone debt crisis also added to the downtrend.

Stock markets in Asia are expected to move along with global markets this week in the absence of any major regional risk events and a light calendar for economic news. Market participants are likely to turn their attention to the U.S. as a number of economic reports -- including consumer confidence, new home sales, durable goods orders, personal income and spending for the month of August and the final reading on the U.S. Gross Domestic Product for the second quarter -- will be released in the coming week.

The U.S. economic data will be the point of focus particularly after the materialization of QE3 from the Fed to bolster the U.S. economy. Markets have rallied following the Fed’s announcement that it would purchase $40 billion in mortgage-backed securities per month for an open-ended period until the labor market improved substantially. However, some analysts think that the data may portray the U.S. economy as being in a much worse shape than what many have feared.

“I think the market certainly is ripe for a pullback. But whatever the pullback, it's going to be rather shallow. Any disappointment in key economic data that would reverse the market's feeling the economy has stabilized,” Peter Cardillo, chief market economist at Rockwell Global Capital, New York, told Reuters.

Investors are also likely to focus on Europe as officials in Spain and France will present their 2013 budgets to their respective parliaments Thursday and Friday. Both will feature more austerity measures to meet their budget-deficit targets.

Meanwhile, the independent stress tests of Spain's banking sector will be published Friday and is likely to show that the actual capital needs by banks could be 50 to 60 billion euros, well below the total 100 billion euros official credit line available.

“While the excitement following the announcement of QE3 faded, there is no major risk event that would trigger a large-scale sell-off in risky assets. The markets should move along with global stories, such as Spain heading or not towards formally asking for some assistance, or China easing further,” said a note from Credit Agricole.

In Asia, Japanese unemployment rate for the month of August is due be released Friday and will remain stable at 4.3 percent. Industrial production in Japan is expected to decline by 1 percent on a monthly basis in August while South Korea’s production is likely to rebound in August on an annual basis.

In India, markets are expected to open on a positive note after ending the week with gains as confidence was boosted after the government implemented the decision to liberalize foreign investment in aviation, retail and broadcasting sectors. The government also announced the decision to hike the diesel prices by 14 percent to reduce the increasing subsidy costs faced by the country.

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