Persistent Middle East Turmoil and AI Development Slowdown Fears Converge as Markets Brace for the FOMC

Starting today, the Korea Exchange has launched a new after-market session running from 4 PM to 8 PM, allowing real-time trading of most listed stocks (excluding ETFs). While the existing alternative trading system (NXT)'s after-market covered only about 600 tradable names, this new session adds more than 1,500 additional tradable stocks. Orders placed during the regular session are not automatically carried over and must be re-entered separately, and only limit orders are allowed — market orders are not — which may make volatility relatively more limited than in the regular session.

While alternative trading venues have long operated both a pre-market (morning) and after-market (afternoon) session, the Korea Exchange had focused solely on the regular session. As the alternative trading market has grown, the Korea Exchange appears to have entered the after-market to avoid losing out on fee revenue and other gains. The net effect is similar to extending the regular session through 8 PM.

Questions were raised about the purpose of this change. While longer trading hours could allow investors more time to avoid rushed decisions during volatile periods, critics noted the change was introduced without a clear stated goal of investor benefit or volatility reduction. Some analysis suggested the aim was to capture domestic trading demand tied to evening-hour US futures movements, particularly around AI-related stocks, but this too was seen as ultimately serving the exchange's revenue expansion interests. Concerns were raised about layering a new institutional change onto an already unstable market, along with advice to monitor how the change in trading hours may disrupt existing pre-market/after-market linked trading patterns.

Last October, Korea and the US signed an MOU on tariffs and US-bound investment, agreeing to a total of $200 billion invested sequentially over 10 years at $20 billion annually. Recently, the US side reportedly shifted its stance to push for faster progress, raising the likelihood of a final signing this Friday. The first project is reportedly the NCR gas combined-cycle power plant in Texas, followed by discussion of eight nuclear reactors and the Alaska LNG project — together, these would already exceed the previously agreed $200 billion.

Multiple sticking points remain. Korea was to retain the right to review individual projects for at least 45 days, but it is unclear whether that process was actually followed ahead of this announcement. For the nuclear projects, how many reactors will be confirmed, whether a Westinghouse stake acquisition will occur, and whether Korean companies and Korean-model reactors will participate all remain undecided. Alaska LNG is a technically challenging project with unproven profitability, and while Korea has taken a cautious stance, the US side is pushing for it to proceed.

On investment structure, Korea reportedly wants an umbrella structure in which gains and losses are jointly absorbed and shared under a single top-level entity, while the US side reportedly wants gains and losses calculated separately, an approach that would dilute Korea's profit share. Whether the agreed sequential annual investment of $20 billion will instead be executed in a lump sum is also a matter of interest, as it could directly affect the won-dollar exchange rate.

Even with specific details still unconfirmed, the stock market is already assessed to be pricing in expectations, particularly around nuclear and energy-related stocks. As a result, this week's official government announcement could produce winners and losers among companies depending on whether they secure orders, warranting a cautious approach.