– Yesterday’s drop in stocks erased more than $600 billion in value after the S&P 500 benchmark saw its worst day since 9/11. Financial stocks were worst hit. Financials in the S&P 500 declined the most since 1989. The biggest losses were in insurance giant AIG (NYSE:AIG), which plunged 61% and America’s biggest savings and loan bank Washington Mutual (NYSE:WM), which dropped 27%.

– The crisis on Wall Street could be felt all around the world this morning as global stock markets tumbled. Japan and South Korea, whose markets were closed for a holiday yesterday, saw the worst of the selling. Their stock markets dropped 4.95% and 6.1% respectively. Hong Kong, Taiwan and Australia also suffered heavy losses.

– Britain’s benchmark FTSE 100 index hit a three-year low, trading down 2.7% at 5,065.90.

– Ratings agency Standard & Poor’s has slashed WaMu’s credit rating to junk. The bank’s credit rating is now BBB-, three grades below investment grade. Standard & Poor’s said it made the decision based on market conditions, not any fundamental change in the financial condition of the bank.

– Central bankers scrambled to calm the crisis and inject much-needed liquidity into the markets. This from Bloomberg:

The Federal Reserve added $70 billion in reserves to the banking system, the most since the September 2001 terrorist attacks, to reverse a surge in borrowing costs sparked by the collapse of Lehman Brothers Holdings Inc.

Fed funds traded as high as 6 percent, or 4 percentage points above the central bank’s target rate for overnight loans between banks, according to ICAP Plc, the world’s largest inter- dealer broker. The margin was the greatest since Bloomberg began tracking the data in 1998. The rate dropped to as low as 0.5 percent after the Fed added the temporary reserves.

– Speculation is mounted as to whether the feds will cut rates further at today’s Federal Open Market Committee meeting. According to Bloomberg: “Fed officials were deeply involved in the urgent weekend meetings at the New York Federal Reserve Bank that culminated in the decision by Lehman Brothers Holdings Inc. to seek bankruptcy protection and Bank of America Corp.’s acquisition of Merrill Lynch & Co.”

– Central banks in Europe also intervened this morning. The European Central Bank pumped just under $100 billion of emergency funds into the market. The Bank of England, meanwhile, which added $9 billion worth of funds yesterday, added a further $35.8 billion this morning.

– The crisis weighed heavily on sentiment on oil prices. Crude fell over 4% to a seven-month low today. It hit a low of  $91.11 a barrel.

– Gold is up on safe-haven buying. But there has been no major breakout. Kitco.com shows New York gold at $784.70/785.90 at 8.28 EST.