Financial markets were on tenterhooks Wednesday over the actions of policymakers -- but it wasn't the Fed meeting in focus and it definitely wasn't the president's State of the Union. Continuing a recent trend, financial markets were instead fixated on goings on in emerging markets.

Related: Why investors aren't snapping up cheap, battered emerging markets

Overnight, Turkey's central bank sharply raised borrowing rates in an effort to support its flagging currency. But after rallying sharply vs. the dollar, the lira turned lower again Wednesday and the nation's main stock bourse slumped. Other emerging market currencies and stocks fell in tandem while major European markets also slumped. The Turkish turnaround spilled over into U.S. futures, which had rallied Tuesday evening along with Asian markets after Turkey's central bank acted.

Update: As of 2pm ET, the Dow was down 0.9% while the S&P was off 0.75%.

There are several factors at work here that potentially explain why developments in Turkey, Argentina, India and other emerging markets are affecting major U.S. and European markets. In a nutshell, upheaval in the emerging markets is simultaneously a cause and a reaction to a global "flight from risk" and search for safety, as represented by the U.S. dollar, Treasuries, gold and Japanese yen.

Related: Fed tapering will lead to LOWER, not higher, rates: Dan Alpert

Secondarily, perhaps, there is also a sense that a global tightening cycle has begun. Central bankers in South Africa, India, Russia and Argentina took steps this week to fight inflation and support local currencies. And, of course, the Federal Reserve is widely expected to resume its tapering program at today's policy meeting, which is more a reduction of easing vs. actual tightening but still a step in a less-easy direction.

In the accompanying video, Yahoo Finance's Rick Newman and I discuss how the emerging markets are causing headaches for U.S. equity bulls. As Newman notes, there are echoes of the recent crisis in Greece and Cyprus, where developments in seemingly periphery nations caused unrest in global markets, at least for a time. And just as the terms PIGS was used to describe Europe's crisis a few years ago, and BRICS came to represent opportunities in emerging markets in the early 2000s, Wall Street has a new favorite shorthand to describe the latest upheaval: "The Fragile Five."

A Morgan Stanley analyst is credited with coining that term to describe Turkey, Brazil, India, South Africa and Indonesia -- five nations facing separate but related challenges due to their over-reliance on foreign capital, which has recently been heading for the exits.