Cashin: Geopolitical factors, Japan unnerving markets today

Geopolitical developments are giving markets jitters today as trading desks digest recent events and their effects on asset prices, said Art Cashin, director of floor operations at UBS Financial Services.

Perhaps the biggest development overnight was a 4 percent drop in Japan's Nikkei Index, which Cashin credited to worries that country's unprecedented policy of coordinated fiscal and monetary stimulus—referred to as "Abenomics"—will meet with new criticism from the Bank of Japan.

To put the magnitude of the drop in perspective, a 4 percent move in the Dow would translate to 617 points. (Check here to see where the Dow is trading now)

"The Bank of Japan has just begun a meeting. There is some feeling that there may be a little bit of push-back to Abenomics and I think that is what has them worried, less than here [in the U.S.]," Cashin said on "Squawk on the Street" Wednesday.

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Between the U.S. and Japanese markets, Cashin explained that there appears to be a "separation" forming, where events across the markets are beginning to diverge. "A lot of people were trying to pin [the drop in Japan] on the tapering talk here in the United States. That's kind of incongruous. The dollar actually weakened, it if was tapering, the dollar probably should have strengthened."

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Elsewhere, the announcement that President Barack Obama was cancelling a Moscow summit with Russian President Vladimir Putin has markets concerned over the move's implications. "It certainly was a surprise. Now you've reintroduced some geopolitical anxiety," Cashin said. "Is it all about Snowden and what's going on? Is it about something else?"

Cashin added that as Ramadan, the Islamic month of fasting, comes to a close, traders will be watching for any geopolitical implications.

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Overall, "the markets are a little nervous here," he said.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul