US stocks eased off from new highs as the second-quarter US earnings season got underway. Alcoa, the aluminium producer, was, as it always is, the first to announce results. They were well received and the shares were up over 5%. However, there is a cautious mood in the air because the equity markets are pricing for, and expecting, around 5.4% earnings growth annualised for Q2; up on 3.4% for Q1. So the stakes are a little higher given that valuations are around 18x on a price/earnings ratio basis. Morgan Stanley published a new target for the S&P500 of +4% higher but over in the UK and Europe, markets looked fragile as Espirito Santo Financial announced suspended trading in its shares and bonds due to financial difficulties.