The stock market has opened cautiously this morning following a lead from weaker European markets However, the key to today’s trading is likely to rest with whether yesterday’s buying momentum in bank stocks continues.

The ASX 200 has just come through a 2 week period in which it underperformed US markets as selling momentum continued in some of the largest Australian stocks, with banks being at the forefront of this. In a move that could last longer than a single trading session, this was turned around yesterday with bank stocks enjoying their best day for some time. If this buying momentum does continue, the ASX 200 will again have a better session than implied by overnight markets.

Today’s RBA meeting looks unlikely to provide investors with any reason to change their macro outlook. Glen Steven’s final statement is likely to keep its cards close to the chest, providing no explicit bias on future policy easing decisions. The RBA will be is likely to wait on more information from the US Fed and on local inflation pressures before signalling its next move.