A late PS: broadcaster ITV is rejoining the FTSE 100.

The latest quarterly reshuffle will see ITV lifted back into the blue-chip index, at the expense of precision engineering firm Renishaw which will return to the FTSE 250.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says the revival in TV advertising has boosted ITV’s share price.

The Love Island broadcaster’s revenue plunged after the hit show was cancelled and episodes of the programme were scaled back during the pandemic but marketing spend is ramping up once again.

There are also hopes for a significant rebound in its Studios business, where it produces content for others, to capitalise on the ongoing streaming wars.

Renishaw only lasted three months in the FTSE 100. It was promoted after a timely share price spike on reshuffle day three months ago, when its founders announced their plans to sell.

Auction Technology Group, internet card group Moonpig, private hospital operator Spire Health Group and consumer review site Trustpilot Group are being promoted into the FTSE 250. The changes start on Monday, 21 June.

We had expected Royal Mail to supplant Renishaw, but they were promoted early, because RSA Insurance was removed from the FTSE 100 after being taken over.

Time to wrap up, with a quick summary.

The UK is to begin negotiations to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, after its 11 members agreed that accession talks could begin.

International trade secretary Liz Truss said CPTPP membership could deliver deeper access to fast-growing markets, such as Japan, Australia, Canada and Chile.

Trade experts, though, argued that membership would have limited benefits, and not make up for losing frictionless trade with the EU.

The US has announced new tariffs on six countries, including the UK, over their digital services taxes. But.... they’ve also been suspended for up to six months, to encourage leaders to agree a global deal on tax.

The EU has also taken action, agreeing to force large multinational companies to publish a breakdown of the tax they pay in each of the bloc’s member states and in tax havens such as Seychelles.

Etsy is trying to tap into the gen-Z crowd by acquiring Depop, the British second-hand fashion resale app, for $1.6bn (£1.1bn).

Etsy CEO Josh Silverman said Depop was growing ‘like crazy, and that the ‘recommerce’ market of second-hand items was likely to boom over the coming years.

Oil has rallied, after Opec+ stuck to its plan of only slowly easing production curbs. Brent crude is trading over $71 per barrel, on track for its highest closing price since May 2019.

The US housing market appears to be cooling, with new mortgage applications dropping to their lowest since the start of the pandemic. Sky-high prices and low supply are hitting demand.

In the UK, mortgage demand picked up after the government extended the stamp duty tax break.

But people kept paying off their credit card bills in April, despite the lure of shops, pubs and restaurants reopening.

Lockdown reading has helped the Harry Potter publisher Bloomsbury to its third profit upgrade of the year after a 22% surge in annual pre-tax profits.

European budget airline Wizz Air has urged governments to lift travel restrictions faster, after plunging to a €576m (£497m) annual loss - and warning of further losses to come until curbs are eased.

Australia’s economy has recovered its pandemic losses:

The London stock market has closed a little higher, with the UK-focused FTSE 250 ending the day at a new record.

Goodnight. GW

In other tax news, the EU has agreed it will force large multinational companies to publish a breakdown of the tax they pay in each of the bloc’s member states and in tax havens such as Seychelles.

The move piles pressure on the UK government to follow suit.

After years of stalled talks, a deal was struck on Tuesday between EU governments and MEPs on country by country reporting, a policy designed to expose how some of the world’s biggest companies – such as Apple, Facebook and Google – avoid paying an estimated $500bn (£358bn) a year in taxes through shifting their profits.

Under the new rules, companies with global revenues of at least €750m (£645m) over two consecutive years must publicly disclose how much tax they pay in each of the EU member states and in 19 jurisdictions put on black and grey lists that are regarded to varying degrees as being “non-cooperative”.

More here:

The FTSE 100 index has closed 27.5 points higher at 7108, up 0.4% today.

That adds to yesterday’s rally, and is a new three-week closing high.

Luxury fashion group Burberry (+3.5%) led the risers after an upgrade from Exane analysts.

Oil giants BP (+2.2%) and Royal Dutch Shell (+2%) benefited from the jump in crude prices. Engineering firm Rolls-Royce (+3%) and commercial property group British Land (+2.3%) also rallied.

The smaller FTSE 250 index also rose, gaining 0.25% to a new record closing high of 22933 points.

More trade news. The US has announced - and immediately suspended - tariffs on certain goods from UK, Italy, Spain, Austria, India and Turkey over their digital services tax.

The tariffs are being imposed after the US concluded that these digital taxes discriminated against US tech companies, were inconsistent with principles of international taxation, and burdened U.S. companies.

These digital services taxes, on the revenues of technology giants, are designed to make firms such as Google and Facebook pay a fairer share of tax where they do business.

United States Trade Representative Katherine Tai says the tariffs will be suspended for up to 180 days to give extra time to complete the ongoing multilateral negotiations on international tax at the OECD and in the G20.

Tai explains:

“The United States is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes.

The United States remains committed to reaching a consensus on international tax issues through the OECD and G20 processes. Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future.”

Back in March, the US warned that the price of UK clothing and footwear, ceramics, beauty products and furniture exports to America could rise by a quarter, unless the digital services tax was dropped.

The Biden administration is now pushing for a global tax deal that would impose a minimum 15% tax on the profits of big international tech companies, which could be agreed at this month’s G7 summit in Cornwall.

Etsy is buying Depop, the British second-hand fashion resale app, for $1.6bn (£1.1bn) to tap into the fast-growing trend of generation Z young people reselling clothes online.

Josh Silverman, the chief executive of Brooklyn-based Etsy, said:

“We are simply thrilled to be adding Depop – what we believe to be the resale home for gen Z consumers – to the Etsy family.”

Announcing the deal on Wednesday, Silverman said he expected the resale craze would continue long after the recovery from the pandemic, and he thought it would be led by Depop’s “passionate community” of fashion-conscious young people.

More than 90% of Depop’s 30 million users are under the age of 26, putting them in the highly sought-after smartphone addicted generation Z – the age bracket below millennials. Etsy said Depop was the 10th most visited shopping site among gen Z consumers in the US.

The company, which was founded by the English-Italian entrepreneur Simon Beckerman in Milan in 2011, now has registered users in more than 150 countries. It’s 2 million active sellers sold $650m worth of second clothes and other fashion items last year, with Depop taking a $70m cut.

Etsy, which was founded in 2005 and floated in 2015, has been seeking to expand its influence among a younger generation as its users are typically older: its sellers’ average age is 39.

Here’s the full story:

America’s housing boom may be slowing, as record high prices and low availability hits demand.

US mortgage applications to purchase a home fell 3% last week, while applications to refinance a loan fell 4.6%, the Mortgage Bankers Association reported.

Overall, mortgage application volume were down 4% last week, to the lowest level since February 2020. This is the second weekly fall in a row.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, says:

“Tight housing inventory, obstacles to a faster rate of new construction, and rapidly rising home prices continue to hold back purchase activity.

US house prices surged to record highs in the months after the first lockdown eased, with the median price for a single-family home jumping by a record-breaking 16.2%.

That has put prices out of reach of some families. Low supply is another problem, while the shortage of raw materials such as timber has driven up the cost of new properties, and led to delays.

Etsy CEO Josh Silverman has told CNBC that Depop has been growing ‘like crazy’, expanding by over 100% last year.

And importantly, that’s with hardly any marketing spend, he adds, showing Depop is an “organic, authentic phenomenon” in the fast-growing “recommerce” (second-hand) market.

Explaining the logic behind today’s $1.6bn deal, Silverman says:

We think Depop is the most exciting company in the most exciting sector in retail right now.

Resale is growing like crazy, in fact recommerce of clothing is growing 40% year-over-year, and is projected to be a $64bn market in the US alone.

And the core demographic for resale is Gen-Z - these are people under 26.

Silverman adds that a quarter of the global workforce right now is Gen-Z, and by 2030, they’re expected to number 1.3 billion workers.

That’s four times the US population, and Depop is the choice of Gen-Z.

Etsy’s acquisition of Depop shows the growing influence of clothing resale platforms, says the New York Times:

More shoppers are turning to the secondhand market for something cheaper and — potentially — greener as the overproduction of clothing increasingly adds to landfill

The trend appears to have been accelerated by the pandemic as more shoppers looked to declutter wardrobes, earn cash by selling their old clothes or set up fashion customization businesses from their bedrooms.

Investor appetite is also on the rise. Last month, Europe’s largest secondhand fashion marketplace, Vinted, raised 250 million euros in a funding round that valued the start-up at €3.5 billion ($4.26 billion), while in the United States companies such as ThredUp and Poshmark have gone public this year.

The Financial Times says the two firms hope to learn from each other:

Depop is hoping to tap Etsy’s expertise in bolstering community safety and scaling internationally, while Etsy hopes to learn from Depop’s mobile expertise and social-media savvy.

“Many of the challenges that we are going through as a business are things that Etsy has gone through before,” said Maria Raga, Depop’s chief executive.

“Etsy has made massive improvements in terms of search and discovery, and this is something that we can definitely learn from.”

CNBC has more details of the sale:

Etsy expects to finalize the deal by the third quarter of 2021. Depop will remain headquartered in London, Etsy said, operating as a standalone business run by current management.

The deal marks the biggest acquisition yet for Etsy, which went public on the New York Stock Exchange in 2015.

Shares of Etsy have roughly doubled in the last 12 months thanks to an e-commerce boom resulting from the coronavirus pandemic. The stock is down 5% year-to-date, however.

British second-hand fashion app Depop is being bought by Etsy, the US e-commerce site for handmade goods and craft supplies, in a $1.6bn deal.

London-based Depop’s fast-growing online marketplace allows people to buy and sell second-hand clothes, and other items, through its mobile app and website.

Founded in 2011, Depop is popular with younger people - so this deal gives Etsy a more youthful demographic than millennials, Gen-Xers and older shoppers (the median age of an Etsy seller is 39, according to one survey).

It also highlights the importance of the recycled clothing market. Some younger, environmentally conscious shoppers are moving away from the fast fashion approach due to the environmental damage and carbon footprint.

Depop had more than four million active buyers last year, and two million active sellers.

It more than doubled its gross sales last year to $650m, with revenues (mainly from commissions), also more than doubling to $70m. Famous users include pop star Lily Allen, who sells items from her wardrobe there.

Etsy reports that:

• Approximately 90% of Depop’s active users are under the age of 26; and young consumers are adopting second-hand fashion faster than any other audience;
• According to Depop’s monthly brand awareness surveys, it has high prompted awareness for the Gen Z demographic within the resale sector;
• Depop is the 10th most visited shopping site among Gen Z consumers in the U.S.

Josh Silverman, Etsy’s CEO, says Depop has ‘significant potential’ to grow:.

“We are simply thrilled to be adding Depop—what we believe to be the resale home for Gen Z consumers—to the Etsy family.

Depop is a vibrant, two-sided marketplace with a passionate community, a highly-differentiated offering of unique items, and we believe significant potential to further scale.

Back in 2019, Depop’s CEO Maria Raga told The Observer that the company wanted to empower “young, entrepreneurial, creative people”, through the sale of ‘pre-loved’ items online.

Today Raga explains:

We’re on an incredible journey building Depop into a place where the next generation comes to explore unique fashion and be part of a community that’s changing the way we shop.

Our community is made up of people who are creating a new fashion system by establishing new trends and making new from old. They come to Depop for the clothes, but stay for the culture.

Here’s more on Depop:

Demand for UK properties picked up in April, after the stamp duty holiday was extended in March to the end of June.

The Bank of England reports that mortgage approvals rose in April, higher than economists expected, and remained ‘relatively strong’:

Approvals for house purchase ticked up in April, to 86,900, from 83,400 in March. They have fallen from a recent peak of 103,400 in November, but have remained relatively strong.

The BoE also reports that net mortgage lending by British lenders slumped to £3.3bn in April. That’s down from the record £11.5bn borrowed the previous month in the race to seal deals before the original tax freeze deadline at the end of March.

That’s also below the £5.7bn average in the six months to February 2021.

The Bank says this fall is due to the government’s original plan to end the tax break, on transactions up to £500,000, on March 31st.

Despite weaker net lending, both gross lending and repayments remain above levels seen since the start of 2020.

The recent variability is likely to reflect the reduction in the stamp duty tax, which was initially expected to end in March, but has now been extended to the end of June.

Chancellor Rishi Sunak extended the stamp duty holiday in March’s budget, but this move came too late too boost borrowing in April (given the time it takes to agree a sale)

Yesterday we learned that house price inflation jumped to almost 11% in May, with the pandemic driving demand for larger, more rural properties.

The oil price is picking up again today, after the Opec+ group agreed yesterday to keep easing supply curbs slowly.

Brent crude is up 1% at $71 per barrel (towards the three-month high of $71.34 hit yesterday), after Opec ministers and key allies including Russia stuck to their policy of gradual supply increases up to July.

Shares in oil companies are higher too, with BP and Royal Dutch Shell both gaining 1%.

Opec+ postponed any decisions about future production until the next meeting in early July, when they should know whether sanctions on Iranian crude are lifted.

Marios Hadjikyriacos, analyst at XM, expains:

At that point the OPEC+ alliance will have more clarity around the demand side of the equation, and more crucially, whether there’s a breakthrough in the US-Iran nuclear negotiations that ultimately brings an overflow of lost supply back online.

Oil’s fortunes now hang on diplomatic forces. If there is a deal with Iran, prices will likely suffer a deep correction but perhaps not a trend reversal. OPEC could help balance things out by slowing its own production increases to prevent Iranian barrels from flooding the market. Demand is recovering quickly, so some targeted production increases can probably be absorbed.

The Institute for Government have a very useful guide to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership on their website, which was updated in February after the UK applied to join.

It explains that membership shouldn’t significantly clash with the UK’s Brexit trade deal (as many CPTPP members already have their own agreements with the EU).

But is also warned that the benefits of membership are unlikely in any significant way to make up for the economic losses of Brexit.

That’s partly because the UK has already rolled over its free trade agreements (FTAs) with some members. It signed a free trade deal with Japan last year, and will probably have signed bilateral deals with Australia and New Zealand well before joining CPTPP.

[On Australia, some UK farmers fear a zero-tariff and zero-quota trade deal would drive them out of business, if it leads to a surge of Australian beef imports].

Plus, there’s concern that negotiators may agree to controversial secret courts where businesses could seek compensation if their profits are hit by government policies]

So, the Institute for Government argued, the benefits of the UK joining CPTPP could be limited to:

1. FTAs with Malaysia and Brunei
2. more ambitious text than is found in some of the rolled-over FTAs on issues such as digital services and data flows
3. the ability to operate under a single set of rules of origin.

It added:

While these benefits are not negligible, they are unlikely in any significant way to make up for the economic losses arising from the UK leaving the EU.

The single set of rules of origin would mean that a product could contain parts from any CPTPP country and still qualify for preferential treatment. EG, cars made in the UK could use more Pacific nation car parts, such as Japanese batteries.

If a good has to have at least 70% ‘CPTPP content’ to qualify for preferential tariffs, for instance, that 70% can come from any combination of CPTPP countries.

The Institute for Government explainer also outlines how the rights and obligations under the CPTPP fall into two categories:

• Rules: for example, on how countries should make new food safety regulations or whether they can ban the transfer of data to other CPTPP members. These are the same for all CPTPP parties (including any new members that may join).
• Market access: how far each CPTPP member will cut its tariffs, open up its services markets, liberalise visa conditions for business travellers, and so on. Each member has its own schedules of commitments. In some cases the commitments are offered to all other members, while in others they are restricted to specific negotiating partners.

And on tariffs, they added:

The CPTPP provides for almost complete liberalisation of tariffs among the participants. Tariffs are retained in only a few highly sensitive areas – for example, Japan keeps tariffs on rice, while Canada’s dairy industry is also protected.

The full explainer is here: Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

New Zealand’s trade and export growth minister, Damien O’Connor, says an Accession Working Group will be set up to begin the accession process with the UK.

This group will examine how the UK will comply with the existing CPTPP rules and will negotiate the UK’s market access commitments.

Under CPTPP accession procedures, candidates are expected to deliver the highest standard of market access commitments, including on goods, services and temporary entry for business people, O’Connor explains in a statement welcoming the move.

“We look forward to working with our CPTPP partners and the UK to establish how the UK will meet the high standards required in the CPTPP, including those relating to market access.

“It will be particularly important that this first accession process sets a strong precedent, both in regard to the substantive commitments expected of the UK, as well as in the adoption of a thorough and robust process.”

The UK government have welcomed the invitation to begin negotiations to join CPTPP.

International Trade Secretary Liz Truss said:

CPTTP membership is a huge opportunity for Britain.

It will help shift our economic centre of gravity away from Europe towards faster-growing parts of the world, and deepen our access to massive consumer markets in the Asia Pacific.

We would get all the benefits of joining a high standards free trade area, but without having to cede control of our borders, money or laws.

The Department for International Trade adds that CPTPP countries made up £110bn of UK trade in 2019 and its rules remove tariffs on 95% of goods traded between members.

But as this map shows, its Pacific Rim members are rather a long way from the UK, rather than the geographical proximity of the EU....

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The UK has moved a step closer to joining a major Pacific regional trade bloc as it tries to forge closer trade links with the Asia-Pacific region after its exit from the European Union.

Earlier today, the 11 members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, agreed to start negotiations for Britain’s entry into the regional free trade agreement.

Yasutoshi Nishimura, Japan’s minister in charge of TPP negotiations, told reporters that a virtual meeting of the TPP Commission agreed to allow the U.K. to begin the process to join.

Bloomberg calls it a “potential boost for the country’s trade following Brexit”, adding:

Yasutoshi Nishimura said the move would strengthen economic ties between the U.K. and Japan, as well as making the zone covered by the deal equal to the EU in terms of economic size. He spoke to reporters after hosting an online meeting of ministers and officials from the 11 countries who make up the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

“The commencement of an accession process with the United Kingdom and the potential expansion of the CPTPP will send a strong signal to our trading partners around the world of our commitment to support a free, fair, open, effective, inclusive and rules-based trading system,” the ministers said in a joint statement.

CPTPP consists of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam -- and was created after president Donald Trump withdrew the US from the Trans-Pacific partnership.

Britain filed a request to join CPTPP at the start of February, saying it hoped to build deeper ties with emerging economies in the Pacific. At the time, International Trade Secretary Liz Truss said membership would mean lower tariffs for car manufacturers and whisky producers, and better access for services providers, boosting employment and prosperity.

As the UK’s trade in goods with EU countries fell by 23 per cent in the first quarter of the year, compared with pre-pandemic levels, there is pressure to strike trade deals elsewhere.

The CPTPP removes 95% of tariffs between its members, but does not create a single market or a customs union, and it does not seek wider political integration.

Becoming a member would accelerate the U.K.’s growth in export trade with faster-expanding Asian economies, according to Bloomberg Intelligence analyst Mike Dennis. The U.K. recorded a trade surplus with CPTPP countries in the first quarter of 2021, he added.

But while joining CPTPP would mean lower tariffs, concerns have been raised about the move.

Back in April, the UK Labour party warned that it could end up being a trade deal with China “by the back door”, as Beijing has signalled that it is seriously considering an application, which the UK might not be able to veto if it joined.

Shadow international trade secretary Emily Thornberry also warned that the UK could end up “as a rule-taker in the CPTPP rather than a rule-maker,” as New Zealand recently launched a public consultation on new accessions to the CPTPP, which said that new members will need to comply with the existing agreement.

More here: Liz Truss urged to reconsider trans-Pacific free trade pact

The moves comes as the global economy tries to recover from the shock of the pandemic, with world manufacturing growth hitting an 11-year high last month.

That lifted recovery hopes, lifting world and European stock markets to record highs yesterday. The UK’s FTSE 100 reached a three-week high, led by commodity stocks.

In another boost, Australia’s economy has returned to its pre-pandemic size, after growing 1.8% over the first three months of the year and 1.1% over the past 12 months.

Markets have opened higher this morning, with the FTSE 100 up another 25 points or 0.35% at 7105 points.

The agenda

• 9.30am BST: UK mortgage approvals for April
  
• 9.30am BST: Bank of England consumer credit
• 10am BST: Eurozone producer prices index for April
• Noon: Weekly US mortgage approvals