This appears to be an issue with all asset types, not specific to materials. Data Tables, Level Sequences, etc.

Image shows the "No" cursor that shows up when attempting the drag/drop. This should ideally show a green "Yes" cursor and highlight the field like the Details Panel does.

Steps to Reproduce

1. Create a Static Mesh variable.
2. Create a "Set Material" node.
3. Find a Material in the Content Browser
4. Drag and drop the Material from the Content Browser to the "New Material" slot in the Set Material node.
5. While hovering you will be presented with a red circle with a cross indicating the drop target is not valid. If you release the drag/drop it will assign the material as expected.

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ComponentGameplay - Blueprint Editor
Affects Versions4.21
Target Fix4.22
Fix Commit4730789
Main Commit4837001
Release Commit4862694
CreatedJan 14, 2019
ResolvedJan 16, 2019
UpdatedFeb 12, 2019