(Bloomberg) -- European stocks ended the day slightly higher as LVMH’s reassuring results and Adidas AG’s surge on profit forecast offset tech’s sharp selloff.

The Stoxx Europe 600 Index pared some earlier gains and was up 0.2% by the close in London. Luxury goods stocks including Hermes International, Burberry Group Plc and Richemont gained after LVMH earnings soothed worries over luxury demand. Asos Plc jumped as it expects profit to rise in its next fiscal year as the online fashion retailer’s turnaround starts to take hold.

The tech sector fell 2.6% after orders at ASML Holding NV missed estimates, roiling other chip stocks such as ASM International NV and Aixtron SE. The selloff in the sector was the biggest since July and comes after the Stoxx 600 tech index’s 25% surge in the past year as ASML led gains with a more than 50% jump. 

The April-to-October period will likely see an increase in volatility, due to the US election and the increased geopolitical tensions that look set to persist, said Mathieu Racheter, head of equity strategy at Julius Baer. Still, Racheter recommended to remain invested and said “this will open up opportunities for investors to position themselves for the next cycle.”

Investors also continue to factor in the outlook for monetary policy as expectations for rate cuts have been pushed back after a slew of hot US economic data in recent weeks. While Federal Reserve Chair Jerome Powell on Tuesday noted it will likely take more time for officials to gain the necessary confidence that price growth is headed toward the central bank’s 2% goal before lower borrowing costs, treasuries rebounded and restored a sense of calm.

With all eyes turning to earnings in the midst of geopolitical tensions, volatility indicators entered the area of concern for the first time since last year. 

Geopolitical concerns further damped sentiment as Israel weighs its response to Iran’s missile and drone attack. 

“An increase in risk aversion continues to build on risky assets which penalizes the stock markets, while supporting the dollar and gold prices,” according to Daniel Varela, chief investment officer at Piguet Galland & Cie SA. Still, with investor sentiment very low, stock markets could “progressively recover lost ground over the days ahead, if political tensions subside somewhat,” he added.

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