Hong Kong stocks are expected to open high today after a typhoon warning closed the market yesterday.

The gains would be a delayed response to a rebound in US stocks on Tuesday, analysts say.

Of course, how the US market did while Hongkongers slept last night could also factor into the Hang Seng Index's performance.

US stocks surged on Tuesday overnight after the Federal Reserve (Fed) signaled that it was in no rush to raise rates and as oil prices tumbled further, spurring the Dow Jones Industrial Average and the Standard & Poor's 500 to their best day in four months.

"Even if the US market retreats 100 points overnight after the sharp gain, Hong Kong stocks should still rebound to a certain extent," said Linus Yip, a strategist at First Shanghai Securities, estimating the rebound will be led by heavyweight HSBC.

Yip said that market turnover is another important indicator for its near-term direction as the stock market has been trading up and down amid shrinking volume. That type of condition won't support a true recovery of the stock market.

Overseas shares shore up

The Fed held interest rates steady at 2 percent on Tuesday, expressing concerns about both the slowing economy and the rising inflation. Oil prices continued to fall from a record above $147 a barrel in July.

Crude oil is now trading around $120 a barrel after falling to $118 on Tuesday.

Asian shares rebounded yesterday from a three-session losing streak. Tokyo's benchmark Nikkei rose 2.6 percent, powered by exporters such as Honda Motor Co and Sony.

Shares in Australia and Taiwan gained more than 3 percent each, while markets in South Korea and India gained more than 2 percent each. Also, Index in Singapore was up around 1 percent.

Castor Pang, a strategist at Sun Hung Kai Financial, estimated that the benchmark Hang Seng Index will open high at 22,300, up from Tuesday's close at 21,949.75. But the rebound might be narrowed toward the day's end, depending on the US market's performance Wednesday.

More recovery might be seen in mainland financial stocks today as they advanced in Shanghai yesterday, he added.

"The US market overreacted to the Fed's action, which was well expected, as well as the oil prices, which have been dropping for days," Pang said, noting that these are the results of the economic slowdown, while US economic data remains the key to watch for investors.

Meanwhile, Cathay Pacific, Hong Kong's biggest carrier, posted a half-year loss of HK$663 million. Yip said that there will be selling pressure on the stock amid uncertainties about whether the losses will persist in the second half.

(HK Edition 08/07/2008 page2)