Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
Today, we’re looking at how Labour’s leadership crisis threatens the UK’s fiscal outlook, CME’s plan to create a futures market for computing power, and Big Tech tapping overseas debt markets to fund the AI build-out.
But first, our number of the week…
0.6%
That’s how much the UK economy grew in Q1 2026, according to figures released this week – the fastest quarterly expansion in a year, and above the BoE’s 0.5% forecast.
Sidekick Takeaway: Unfortunately, much of this growth came from a bumper February, before the Iran war began. Analysts are expecting Q1 to be the high point for the year, with the economy potentially stalling on higher energy costs and political turmoil.
Only have a minute to read? Here’s the TL;DR:
- Labour’s leadership crisis risks paralysing the UK government at the worst possible time. With the economy navigating an inflation shock from the Iran war and fiscal headroom already tight, a months-long contest could leave the country without decisive policymaking when it needs it most.
- CME Group is partnering with Silicon Data to create a futures market for computing power, bringing commodity-style financial infrastructure to AI’s scarcest resource. The move could bring price transparency, but also risks inviting speculative flows into a bottleneck market.
- Alphabet and Amazon are tapping yen, euro, and Swiss franc debt markets to fund AI infrastructure spending. The global borrowing strategy reflects balance sheet logic rather than desperation, and signals that Big Tech views AI as a permanent infrastructure commitment.
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Analysis Paralysis: The Cost of Labour’s Leadership Limbo
The Labour Party is in open revolt against Keir Starmer.
Health Secretary Wes Streeting resigned this week, citing a loss of confidence in the PM. More than 90 Labour MPs have called on Starmer to step aside, with one vacating his seat to clear a path for Manchester Mayor Andy Burnham to launch a leadership bid.
Starmer has vowed to fight on. A prolonged political battle now looks increasingly likely.
And for the UK economy, the timing could hardly be worse.
A contest the UK can’t afford
A leadership struggle risks paralysing the UK government at a moment when policymaking is urgently needed:
- The UK is navigating an inflation shock driven by the Iran war. Although Q1 GDP growth was healthy, falling business confidence indicates that the rest of the year may not be.
- Whoever wins the premiership will inherit a strained fiscal position. The UK’s debt-to-GDP ratio currently hovers around 94%, despite Starmer’s budget reforms.
- Potential successors may push for looser fiscal policy, but the challenge is ensuring that additional spending fuels growth. Otherwise, higher spending risk making the UK’s fiscal problems even worse.
Given the UK’s fiscal challenges, a drawn-out battle is a luxury the country’s economy can’t afford.
The quicker the PM contest wraps up, the better.
Sidekick Takeaway: The temptation for any new PM will be to spend their way to popularity. But with borrowing costs at multi-decade highs and inflation resurgent, the bond market has already meaningfully narrowed the room for budget manoeuvring.
The AI Future: CME Plans to Financialise Computing Power
Access to computing power has become the critical bottleneck of the AI boom.
A global shortage has already triggered hundreds of billions of dollars in data centre investments. But for years, there was no transparent way to price or hedge the cost of this resource.
Now, that could be set to change. CME Group, the world’s largest derivatives exchange, is partnering with index provider Silicon Data to create a futures market for compute.
If successful, the partnership could bring the same financial infrastructure used for oil and metals to the resource underpinning every AI model.
Hedging the AI buildout
A dedicated futures market could bring price transparency to a resource that has mostly been priced through opaque deals:
- A futures market would give AI builders, cloud providers, and financial firms a way to hedge against compute price swings. The logic is similar to how airlines hedge jet fuel.
- Big Tech is expected to spend more than $700bn on AI infrastructure in 2026, up from $410bn in 2025. The scale of capital flowing into compute means that even modest price transparency could result in major shifts to industry resource allocation.
- The project is still pending regulatory review, but the direction of travel is clear: compute is being increasingly institutionalised as a tradeable commodity, just like oil or wheat.
For AI-exposed companies, a functioning compute market could help reshape the sector’s cost structures, allowing for more predictable pricing and profitability.
Sidekick Takeaway: Futures markets can be powerful tools for price discovery, but they also risk fuelling speculation. The risk is that financialising AI’s scarcest resource adds a new layer of volatility to an ecosystem already burning through capital at an extraordinary pace.
Crossing Borders: Big Tech Goes Global to Fund the AI Build-Out
Big Tech is scouring the world’s debt markets for capital.
This week, Alphabet disclosed plans for its first yen-denominated bond sale after raising billions in Europe and Canada. Meanwhile, Amazon is preparing its debut Swiss franc offering.
These moves are primarily driven by the sheer amount of capital required to build out AI infrastructure.
But they also highlight an important lesson: Big Tech is viewing AI investment as a long-term commitment, not a cyclical bet.
Method, not madness
Big Tech’s global borrowing isn’t a sign of desperation. Instead, it reflects a deliberate financing strategy:
Hyperscalers earn revenue globally – in yen, euros, and Swiss francs. Issuing debt in those currencies matches liabilities to expected income streams, reducing foreign exchange risk.
Alphabet and Amazon also carry some of the strongest credit ratings in the corporate world. They can often tap overseas markets at lower borrowing costs than in the US.
Notably, Amazon structured its Swiss franc offering with maturities of up to 25 years. That duration is unusual for tech companies, and more closely resembles how infrastructure operators finance long-lived physical assets.
The key lesson is that AI capex is no longer being funded like a growth bet.
Instead, it’s being structured like a permanent capital commitment, diversified by currency and backed by long-maturity obligations.
Sidekick Takeaway: Investors often focus on AI capex as a risk to margins. But with Big Tech willing to lock in 25-year debt commitments across multiple currencies just to finance that spending, the signal is one of deep long-term conviction.
Notices
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