Lee Stresses U.S. Alliance as North Korea Reports Missile Test and Seoul Stocks Tumble

North Korea's state media reported Tuesday that the country test-fired a tactical ballistic missile to upgrade a key component of its weapons systems, calling the launch a "big success." The report came a day after South Korea's Joint Chiefs of Staff said it detected multiple ballistic missiles launched from the Pyongyang area toward the East Sea.

U.S. President Donald Trump said Monday that he may meet North Korean leader Kim Jong-un during his upcoming trip to Asia, raising the possibility of renewed summit diplomacy between Washington and Pyongyang. Asked at the White House whether he planned to meet Kim during the trip, Trump replied, "I may," adding, "That'll be exciting, won't it? But I get along with him."

The International Monetary Fund raised its growth forecast for South Korea in 2026 to 3.3 percent, citing strong semiconductor exports that more than offset the fallout from the Middle East war. In its World Economic Outlook report, the Washington-based organization lifted its forecast by 0.7 percentage point from its July projection. The revised figure exceeded its global growth forecast of 3.1 percent.

Seoul shares extended losses late Tuesday morning as fresh concerns over rising competition from China and artificial intelligence valuations emerged ahead of major corporate earnings reports and the release of U.S. inflation data. After opening 3.1 percent lower, the benchmark Korea Composite Stock Price Index fell 386.25 points, or 6.05 percent, to 5,997.99 as of 11:20 a.m.

Drought conditions have been reported in 97 regions across South Korea, with the situation particularly severe in Yeongcheon, North Gyeongsang Province, the interior ministry said Tuesday. Water storage levels in agricultural reservoirs nationwide stood at just 70 percent of the average for a normal year, the ministry said in its October drought report.