The Diageo share price is surging today after some encouraging news from the brewer. The shares jumped to 3,290p, which is 10% below its all-time high of 3,640p. The DGE shares are the best performers in the FTSE 100 today followed by Glencore, Scottish Mortgage Investment Trust, Weir Group, and Rio Tinto.
What happened: Diageo is a leading brewer that owns some of the key brands like Johnnie Walker, Windsor, Ciroc, Baileys, and Guinness. Like other alcoholic beverage manufacturers, the company was affected by the pandemic as many governments barred bars and restaurants from operating.
However, things seem to be changing for Diageo as the world reopens. The company said that it expects to have an operating growth of at least 14% this year. The firm also said that it would start returning capital to its shareholders. It will distribute about 4.5 billion pounds to investors in the next three years.
Diageo is not the only company doing that. In a recent report, BP said that it would restart its share repurchases plan after having trimmed its debt. The same is true for companies like Unilever, Royal Dutch Shell, and Lloyds Bank.
The four-hour chart shows that the Diageo share price has been in a strong rally recently. However, it has found substantial resistance at the 3,305p level. The stock is also being supported by the 50-day and 25-day exponential moving averages (EMA). It has also moved slightly above the ascending trendline shown in green.
Therefore, the stock will likely break out higher as the economy reopens. The most immediate level to watch will be the all-time high of 3,640p. However, a drop below this week’s low of 3,170p will invalidate this prediction.
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