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London. Send an e-mail to a fund manager at the moment and the chances are high you will get a bounced reply telling you that he/she is out of the office.

This week marks the start of August, a period that can be — but is by no means always — one of reduced investing and low tolerance for anything other than major market-moving events.

So although the week promises important earnings reports from key European banks, a couple of key central bank meetings and one of the biggest US economic data releases — jobs — trading on financial markets may be limited.

In fact, some big investors have already effectively closed up for the holidays.

State Street, the giant US financial services firm that watches over $9 trillion in institutional investor assets, says that activity among its clients in late July was way below average.

Such dips in buying and selling can cause volatility on markets because fewer buyers and sellers can mean exaggerated price moves.

That said, there is no guarantee that volume will be light.

Historical numbers from Thomson Reuters Datastream paint a mixed picture.

Over the past four years, from 2006-09, volume on the FTSE 100 index and Germany’s DAX has been higher in August than July on two occasions and lower on two.

So while it may be that a lot of market people are taking a break, asset prices can easily become volatile if there is something significant enough to move them in a quiet period.

This week, that could be European banks, many of which are due to report earnings.

Since the generally positive stress test results were released on July 23, Europe’s financial sector stocks have risen around 5 percent. Indeed, they are up 22 percent since hitting a 2010 low on June 8.

A lot of this is because investors reckoned the sector was oversold after the Greek debt crisis. Both ING Investment Management and AXA Investment Managers, for example, have recently lifted their exposure to European banks.

The next test for this sector will be the results. They are due from HSBC, Standard Chartered, BNP Paribas, Barclays, Societe Generale, Commerzbank, Lloyds Banking Group and RBS.

US banks have mostly reported already, and generally on the positive side. According to Thomson Reuters Proprietary Research, reported and remaining estimated quarterly earnings for the financial sector have risen 35.9 percent.

It compares with an expectation of 21 percent at the beginning of July, with 71 percent of results in the sector being better than expected.

Bond prices, in the meantime, are reflecting a climate of low interest rates, generally manageable inflation expectations and worries about the slowing US economy.

The commitment to low-yielding government bonds will be tested this week by meetings of the European Central Bank and the Bank of England.

Investors in particular will be looking for guidance from the ECB about how comfortable it is with the pace at which European banks are weaning themselves off extraordinary liquidity measures.

Finally, the US jobs data caps the week, giving a snapshot on the impact an apparently slowing US economy is having on already lagging employment patterns.

It is usually a big market mover and will quite likely be again, even if a lot of people get the result on the beach.

 
Reuters