European shares set to open lower as Fed rate hike bets, tech weakness weigh

European shares are set to open lower on Tuesday, driven by expectations of imminent interest rate hikes and concerns over corporate spending on artificial intelligence.

European ‌shares were ​set to open lower on Tuesday, as expectations for imminent interest rate hikes by the Federal Reserve and concerns around increased ‌corporate spending on artificial intelligence dented sentiment.

Futures tracking the pan-European STOXX 600 index fell 1.1% as of 0637 GMT. Contracts tracking Germany's DAX and France's CAC 40 index fell 1% and 0.8%, respectively. Traders now see ‌the Federal Reserve hiking interest rates by a total of 50 basis points by the ‌end of this year, according to the CME Group's FedWatch Tool, to combat inflation pressures stemming especially from higher energy costs.

Markets also held on to bets that the European Central Bank will lift borrowing costs by another 25 ⁠bps later ​this year, according to ⁠LSEG-compiled data, despite President Christine Lagarde downplaying the likelihood of second-round inflation effects on Monday. European tech stocks are likely to ⁠come under pressure, tracking weakness in Asia and among Wall Street megacaps late on Monday.

Globally, the tech sector ​had a strong run earlier this quarter as investors bet on the AI boom, with ⁠those in Europe performing the strongest among sectors. However, as borrowing costs tick higher, corporates banking on debt-backed spending are likely ⁠to ​come under pressure. In corporate news, EasyJet and its investors are holding out for at least £600 million ($794.46 million) more from U.S. investment firm Castlelake, the Financial Times reported on Monday.

Plans by UniCredit ⁠to take Commerzbank private would be very difficult to implement under the German lender's current structure, government ⁠sources told Reuters ⁠on Monday. Dutch brewer Heineken appointed Rafael Oliveira as its new CEO, replacing Dolf van den Brink, who resigned from the company amid an industry-wide slump ‌in sales.