Tokyo Traders
Source: Dick Thomas Johnson under Creative Commons license.

The Dow Jones Industrials (DJINDICES:^DJI) is followed around the world as a barometer of stock market health, and Monday's 313-point drop in the Dow sent shock waves across the Pacific. In trading earlier today, key stock markets in the Asia-Pacific region followed suit with their own declines, reflecting investor anxiety about the possibility that the holdout status that the U.S. economy has enjoyed in the presence of weakness throughout most of the rest of the world could finally come to an end.

The Nikkei 225 (NIKKEIINDICES:^NI225) led the way downward with a 714-point drop to 16,931, while Hong Kong's Hang Seng Index (HSIINDICES:^HSI) posted a nearly 3% decline and China's Shanghai Composite (NYSEINDEX: ^SSEC) fell 2% to hold just above the 3,000 level.

Giving up on gains
Tuesday's move added Japan to the list of countries that have entirely given up gains from earlier in the year. The Nikkei had been up by almost 20% for 2015 in early August, but the recent drop has wiped out those gains and left investors down a few percent on the year. Market participants appear to be losing confidence in the Japanese government's ability to manage the economy effectively, as the nation has once again seen its core inflation rate turn negative and its GDP fell in its most recent quarter. With Japan's central bank already using huge levels of stimulus to try to jump-start economic growth, it's unclear how much more room the island nation has to take further extraordinary measures.

Meanwhile, Hong Kong's recent drop has raised some concerns about the region's real estate boom, which has seen prices continue to rise but the volume of transactions start to moderate. If declines in stock markets continue, some fear that demand for high-end real estate could dry up quickly, and the ripple effect on highly leveraged economies in the broader region could be substantial.

In China, profit weakness in the industrial sector added more fuel to the long debate about how long that country's economic slowdown will continue. Its manufacturing base is a key driver of demand for commodities, and the sluggishness in the Chinese economy has played a major role in the terrible performance among commodity stocks around the world. Until those dynamics change, they could feed on themselves and make investor sentiment even weaker.

With the economy and the financial markets alike having globalized, the main question on any given day is where a big market move originates. For now, the U.S. appears to be driving recent moves, but that could change quickly if news from Asia suggests another wave down in the economic weakness we've already seen play out over the past couple of years.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.