US shutdown shake up for local stock market THE looming prospect of a US government "shutdown" has bruised investor confidence but has not stopped the Australian share market notching its strongest quarterly rally in four years. Suffering its biggest one-day fall in almost two months, the ASX 200 closed 1.7 per cent lower yesterday. But the index finished 8.7 per cent higher for the three months to September - its best quarter since mid 2009 when the market was bouncing back from the lows of the financial crisis. It came as analysts all but ruled out a rate cut today, with all 33 economists polled by Bloomberg tipping the Reserve Bank will keep the cash rate at 2.5 per cent today. Australian investors retreated from the share market yesterday as another ugly political brawl about government funding and debt broke out in the world's largest economy. The US Congress must pass a new budget for the federal government by 2pm today, Melbourne time, to avoid a funding freeze that would force 800,000 government employees to take unpaid leave and close non-essential services. Of greater concern to investors, analysts say is a similar standoff over increasing the country's debt ceiling - the amount of money the government can borrow - and a potential US government default. Gold stocks were among the few winners yesterday, bolstered by the spot pricing of the precious yellow metal hitting $US1349.59 an ounce. A shift back into defensive assets also prompted the Australian dollar to fall to a two-week low. Last night it was buying US93.31c. HSBC chief economist Paul Bloxham said markets were likely to remain volatile until the US government increased its debt ceiling. "Whether or not the government shuts down the debt ceiling issue remains unresolved," he said. That is going to create a great deal of uncertainty. The renewed bout of nervousness among local investors comes as the Reserve Bank board meets today. for its monthly decision on interest rates. TD Securities head of Asia-Pacific research Annette Beacher said talk of a housing bubble was overblown given continued weakness in business spending and jobs growth. TD Securities put the inflation rate at 2.1 per cent for the 12 months to September - towards the bottom half of the RBA's 2 per cent to 3 per cent target band. "While we remain of the view that the RBA is unlikely to actually lower the cash rate from here, it is even further way from increasing it," Ms Beacher said.