The share market has dropped sharply into negative territory after the latest blow to hopes of a deal in the United States to avoid the fiscal cliff.
The latest act in the drama has seen House speaker John Boehner pull his own bill on tax increases due to a lack of support from fellow Republicans.
It was a big setback to reaching a deal before a raft of compulsory tax increases and spending cuts come into effect at the end of the month.
After seeing gains of around 0.5 per cent before the announcment, the share market closed down 0.25 per cent.
The All Ordinaries ended down 11 points at 4,635 and the ASX 200 matched that fall to 4,624.
It was a fairly quiet day otherwise.
Shares in Origin Energy ended down 1.2 per cent despite signing a deal with a Chinese company to supply gas for north Queensland mines at prices more than double the current rate.
The energy sector was mostly higher though after oil prices picked up overnight; Santos led with a 1.7 per cent rise.
The major banks managed to remain in positive territory, Commonwealth leading with a 0.8 per cent gain.
The resources sector went into reverse, with BHP Billiton and Rio Tinto both down close to 1 per cent.
The Australian dollar was down, and about 5pm (AEDT) was worth 104.5 US cents.
It was also worth 79.1 euro cents, 64.3 British pence and 87.9 Japanese yen.
West Texas crude closed just below $US90 a barrel, Tapis was higher at $US115 and spot gold saw another sharp fall to $US1,646 an ounce.