Stock volatility returns as virus fears renewed, Fed sees zero rates through 2022, and Facebook's WhatsApp seizes on banking: This Week in Finance

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Markets rocked by renewed virus fears

Global stock markets suffered their worst day since March amid fears that a resurgence in coronavirus cases could cause more economic damage. U.S. stocks fell the most in 12 weeks on Thursday, snapping a rally that had approached all-time highs, as the UK’s FTSE 100, the Dax in Germany, and France's CAC 40 all lost 4% or more. Share prices had gained in recent weeks on hopes of a rapid recovery as governments loosened coronavirus restrictions, with Thursday's pullback marking what one strategist termed a “wakeup call.” ?? Here's what people are saying.

Fed sees zero rates through 2022

Holding interest rates unchanged near zero, the U.S. Federal Reserve said it expects rates to stay there through 2022. The central bank also said it would increase purchases of assets, such as government bonds and commercial mortgage-backed securities, “to support the flow of credit to households and businesses.” The Fed predicted that unemployment would fall to under 10% by the end of the year and to 6.5% by 2022, showing confidence that a recovery is getting under way. ?? Here's what people are saying.

• U.S. recession is made official: The U.S. economy fell into a recession in February, the National Bureau of Economic Research declared, following the longest U.S. expansion in records back to 1854.

The key to economic recovery

Does May's unexpectedly strong U.S. jobs report mean the economy is bouncing back? Federal Reserve officials, business leaders, and economists alike agree: Any lasting economic recovery this year will depend on controlling the spread of the coronavirus. Some 87% of economists in a June survey by the National Association for Business Economics believe a second wave of infections poses the greatest economic risk. While the overall number of new U.S. coronavirus cases has decreased in recent weeks, California, Utah, Arizona, North Carolina, Florida, and Texas are among states reporting a pickup. ?? Here's what people are saying.

• Global hiring points to rebound: LinkedIn data suggest that hiring showed its first material signs of rebounding in the past two weeks, led by encouraging moves in France, Italy, Singapore, and China.
• Jobs report too good to be true?: The U.S. Bureau of Labor Statistics said it identified 9 million people who, had they been properly identified as unemployed in May, would have pushed the jobless rate up to almost 18%.

World economy faces record hit: OECD

The global economy faces its biggest peacetime slump in 100 years, the OECD warned, predicting a global contraction of 6% this year. In the “equally possible scenario” of a second wave of infections, global GDP would plummet 7.6%. European economies are likely to take the biggest hit, with Italy, France, and the UK looking at an 11% decline. The OECD said the pandemic has deepened inequalities, and it called on governments to support young and low-paid workers. ?? Here's what people are saying.

• UK economy to be 'hit hardest': The OECD recommended that the UK delay the end of its transition period with the EU to “help reduce uncertainty.” The UK economy shrank by a record 20.4% in April in a crash three times greater than the 2008 financial crisis.

EU recovery fund: grants or loans?

European finance ministers met to discuss the EU’s coronavirus recovery fund, with the main point of contention being whether beneficiaries of the fund should have to repay the money. The European Commission’s latest proposal is a €750 billion package, of which €500 billion is to be distributed as grants and €250 billion as loans. Writing on LinkedIn, BNP Paribas senior economist William De Vijlder suggested an alternative arrangement: giving member states a chance to turn loans into grants if they meet certain "positive impact" criteria agreed upon in advance. ?? Here's what people are saying.

• EU to reopen to non-EU travelers: The bloc is urging member states to gradually reopen their borders to travelers from outside the EU, stressing the importance of international travel to tourism and business.

Lloyds hit with ￡64M fine

Lloyds Banking Group was fined ￡64 million over its handling of more than half a million mortgage customers who suffered payment difficulties. The Financial Conduct Authority found that the bank failed to provide appropriate support to “vulnerable” customers in arrears from 2011 to 2015, including those experiencing marital splits, the death of a spouse, or loss of a job. The penalty is the largest fine for any UK high street lender in five years and comes at a time when millions of customers are struggling financially amid the pandemic. ?? Here's what people are saying.

The dawn of WhatsApp banking?

WhatsApp has sensed an opportunity in Indian retail banking and is using the lockdown to its advantage, The Economic Times reported. The Facebook-owned messaging platform, which has more than 400 million users in India, has integrated technology that lets banks provide customers with services such as account balance inquiry, credit card statements, and even account opening. With banks running on skeletal staff and people afraid of stepping out, the service seems to be taking off. ICICI Bank says close to a million users have applied for WhatsApp Banking, while Kotak Mahindra says it’s handling 1.5 million messages a month on the platform. ?? Here's what people are saying.

—With Natalie MacDonald, Cate Chapman, Riva Gold, Pieter Cranenbroek, Emily Spaven, and Shajil Kumar.

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