Diageo’s share price is up as sin stocks hold firm amid Monday stock market turmoil
Diageo investors will be toasting their stocks today as the alcoholic drinks maker was one of the strongest FTSE 100 risers on Monday.
By 1.30pm (GMT) Diageo was the sixth-highest riser, with its shares gaining 2.3 per cent to reach 1,922p, on a day when banking giants Barclays and Royal Bank of Scotland both fell more than 10 per cent by mid-morning but commodities traders stayed resilient.
Housebuilder shares were also hammered on Monday, as the stocks in all the FTSE 100-listed developers were suspended from trading for five minutes this morning.
"I think there are a number of factors supporting the Diageo share price," Phil Carroll, beverages and agriculture analyst at Shore Capital told City PM
"As a global business seen as a cash compounder it is perceived as a safe haven.
Read more: Diageo chief executive backs Remain in letter to UK employees
"Furthermore, following the weakness in sterling after the Brexit vote there are some perceived translational and potential transactional FX gains driving upgrades to earning expectations in the market today, given it has a material level of profits generated in USD."
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Diageo's drink offerings include Smirnoff vodka, whisky Johnnie Walker, Guiness and Baileys, while the company has more than 4,700 employees based in the UK.
Read more: Smirnoff has just made cider the new alcopop
Other sin product shares, which are often the most resilient in times of market crisis, were also high risers today. Tobacco majors Imperial Brands and British American Tobacco (BAT) were the 11th and 13th highest risers, both gaining 1.5 per cent to reach 4,453p and 3,749p respectively.
Imperial and BAT were two of the only companies trading up on Friday, when the announcement of the UK's vote to leave Europe sent markets into turmoil.